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Retained Earnings Statement (Statement of Retained Earnings)
One of the components of financial statements, retained earnings statement depicts
the changes in enterprises’ retained earnings over a period. It is a reconciliation
of the retained earnings at the beginning of the period and at the end of the period
with items affecting the changes reported therein. The items that form part of the
retained earnings statement are the net income for the period and dividends declared
during the period. It may also contain any other item that is charged or credited
to retained earnings.
A typical statement of retained earnings is presented below:
|
STATEMENT OF RETAINED EARNINGS
For the year ended 31 December 2009 |
| Retained earnings, 1 January 2009 | $25,000 |
| Add: Net income for the year | $20,000 |
| $45,000 | |
| Less: Dividends | $15,000 |
| Retained earnings, 31 December 2009 | $30,000 |
Generally, an enterprise prepares a Statement of changes in equity instead of the
retained earnings statement which comprise of not only the changes in the retained
earnings during the year but also the changes in the enterprises’ other equity accounts
like capital stock and reserves.
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