Understanding Retained Earnings Report
The statement of retained earnings is an essential financial document that provides insight into how much money a company has kept in the business to date.Formula
Retained Earnings = Beginning Balance + Net Income - DividendsHow do I calculate the statement of retained earnings report?
It is important to understand how to calculate a statement of retained earnings. In order to calculate the statement of retained earnings, you must first locate the retained earnings amount from the balance sheet under the shareholder’s equity section. Then, use the following formula: Retained Earnings = Beginning Balance + Net Income - Dividends. With this formula, you can easily calculate the changes in retained earnings for a specific period. It is helpful to use spreadsheet software, such as Sourcetable, to make the calculations easier.
What is a statement of retained earnings?
A statement of retained earnings is a financial report that shows the net earnings that are retained and reinvested into the business.
What is the purpose of a statement of retained earnings?
The statement of retained earnings is used for business decision making, as well as to disseminate information to external interested parties.
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Key Points
How do I calculate statement of retained earnings report?
Retained Earnings = Beginning Balance + Net Income - Dividends
Retained Earnings Reconciled
The statement of retained earnings reconciles retained earnings for a specified period. This is a financial statement prepared according to Generally Accepted Accounting Principles (GAAP) that summarizes the changes in the retained earnings for a particular period.
Statement of Owner's Equity
The statement of retained earnings is also known as a statement of owner's equity, an equity statement, or a statement of shareholders' equity. This document summarizes the changes in the equity of the owners of a business, including the profits earned by the business and the dividends paid to the owners.
Online Access
Retained earnings statements can be found online, allowing you to easily view the changes in retained earnings for a period. This can help you understand the performance of the business over time and plan for future growth.
GAAP Compliance
The statement of retained earnings is prepared in accordance with Generally Accepted Accounting Principles (GAAP). This ensures that the financial statements are accurate and reliable, allowing investors and other stakeholders to make informed decisions about the business.
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