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whyis the statement of retained earnings the connecting link betweenin the incime statement and...whyis...

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Accounting

whyis the statement of retained earnings the connecting link betweenin the incime statement and the balance sheet ?

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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

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In: Accountingwhyis the statement of retained earnings the connecting link betweenin the incime statement and...whyis the statement of retained earnings the connecting link betweenin the incime statement and the balance sheet ?

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