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Discuss the function of the retained earnings account on a balance sheet and how it is affected by the income statement.

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Discuss the function of the retained earnings account on a balance sheet and how it is affected by the income statement.

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Retained earnings in the balance sheet is that profit which is not distributed to shareholders and is reinvested or retained in the company. The retained earnings are directly affected by the income statement because net income reported in the income statement affects the retained earnings. Retained earning to be reported in the balance sheet is ...

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Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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