Q20RQ - Horngren'S Financial And Managerial Accounting

Question

What does the statement of retained earnings report?

Step-by-Step Solution

Answer

The statement of retained earnings reports how the corporation's retained earnings balance transformed from the start of the period to the end of the period.

Step 1: Introduction to topic

Retained earnings is the amount of net income left with the corporation after it has paid dividends to its stockholders.

Step 2: The statement of retained earnings report

The statement of retained earnings is the connecting point between the income statement and the balance sheet of a corporation. It shows any deductions from the earning after tax to determine the net sum that to be added in shareholder's equity.