Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 20 - No. 9)
What is the purpose of the 'Statement of Retained Earnings'?
To show the sources and uses of cash.
To summarize the changes in the retained earnings account over a period.
To present the assets, liabilities, and equity at a point in time.
To show the company's profitability.
Explanation
The statement of retained earnings tracks the beginning balance of retained earnings, plus net income (or minus net loss), minus dividends, to arrive at the ending balance.
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