The statement of retained earnings relates the income statement to the balance sheet by showing how the Retained Earnings account changed during the accounting period.

Question

Quizplus · Accepted Answer

The statement of retained earnings reconciles the beginning balance of retained earnings on the balance sheet with the end balance of retained earnings after considering net income/loss and dividends for the period, therefore showing how the income statement affects the balance sheet.

The Statement of Retained Earnings Relates the Income Statement to the Balance