why is the statement of retained earnings the connecting link between in the incime statement and...

why is the statement of retained earnings the connecting link between in the incime statement and the balance sheet ?

Expert Solution

In the statement of retained earnings, you use the net income (which was calculated in the income statement) to calculate the ending balance of retained earnings which is a part of the balance sheet.

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COMPANY NAME
Statement of Retained Earnings
Beginning balance of retained earnings	XXX
Add: Net income [Taken From the Income Statement]	XXX
	XXX
Less: Dividends [if any]	XXX
Ending balance of retained earnings [To be used in the balance sheet]	XXX

ekkarill92 answered 2 years ago

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