Following the free online accounting training class on retained earning statements will help you to understand:
- What is Retained Earning Statement
- Example or Template of Retained Earning Statement
- Meaning of Equity Statement or Statement of Owner’s Equity
- Formation or Procedure of Making the Statement of Retained Earnings
The company prepares an income statement to determine the net income or net loss. But some corporations also prepare retained earnings statements in addition to the income statement. The statement of Retained Earnings, also known as Equity Statement or Statement of Owner’s Equity recognizes the changes in retained earnings which are occurred from one accounting period to the next accounting period.
The statement of retained earnings shows the balance of beginning retained earnings, the net income for the particular accounting period, a deduction amount for any dividends paid, and an ending retained earnings balance. If any company does not pay any dividend retained earnings of that company will increase only by the amount of reported net income of the current period. The elements which are reported in the statement of retained earnings affected the accounting equation.
The net income of any entity which is determined from the income statement increases the net assets and an equivalent increase in Retained Earnings, which also increases the Owners Equity section. Reversely a net loss for a particular accounting period decreases the retained earnings. But both cash and stock dividends of that company decrease in the retained earnings. If there any Changes occur in accounting principles then the retained earnings of the company may increase or decrease. And previous period adjustments also bring changes by increasing or decreasing the retained earnings.
Some Corporations sometimes present a statement of stockholder’s equity instead of a statement of retained earnings.
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