Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 44 - No. 16)
What is the relationship between the Income Statement and the Statement of Retained Earnings?
They are separate and unrelated financial statements.
Net income (or loss) from the Income Statement is used to calculate the ending retained earnings on the Statement of Retained Earnings.
They are both prepared at the beginning of the accounting cycle.
The Statement of Retained Earnings provides the revenue figures used in the Income Statement.
Explanation
Net income (or loss) from the Income Statement is added to (or subtracted from) beginning retained earnings to arrive at the ending retained earnings balance.
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