knowledgeable slide

2. contents
Definition
Statement of retained earning
Format of retained earning
Purposes of retained earning
Retained earning calculation
Restricted or unrestricted

3.  A statement reporting how much of
the firm,s earnings were retained in
the business rather than paid out in
dividends.
 It is the sum of the annual retained
earnings for reach year of the firm,s
history.

4.  The retained earnings statement reconciles the beginning and ending
balances in the retained earnings account. This statement can be
presented as a separate statement or in a combined statement of
income and retained earnings.
 A company’s overall income net income will cause retained earnings to
increase and a net loss will result in a decrease. Retained earnings is
also reduced by shareholder dividends.
 The statement of retained earnings provides a succinct reporting of
these changes in retained earnings from one period to the next. In
essence, the statement is nothing more than a reconciliation or “bird’s
eye view” of the bridge between the retained earnings amounts
appearing on two successive balance sheets.

6. Accumulation of Earnings
Investment in fixed assets
To meet working capitals

7.  The calculation is:
+ Beginning retained earning
+ Net income during the period
- Dividends paid
= Ending retained earnings
The retained earning formula is also known as retained
earnings equation

8.  RETAINED EARNINGS:
Retained earnings may be legal,
contractual and voluntary.
• UNRESTRICTED EARNINGS:
Unrestricted earnings are free
and can be declares as dividends.