The Retained Earnings statement is based upon which of the following relationships? A. Retained Earnings – Net Income – Dividends.
B. Retained Earnings – Net Income + Dividends.
C. Retained Earnings + Net Income + Dividends.
D. Retained Earnings + Net Income – Dividends.

D. Retained Earnings + Net Income – Dividends.

Explanation:

Retained earnings can be defined as the accumulated profits or net income generated by an organization but are not distributed or given as dividends to the stockholders, rather are reinvested in to the business.

Generally, retained earnings are used to pay off debts, used for capital expenditures and working capitals.

The Retained Earnings statement refers to the changes in the retained earnings account of an organization or business firm, which occurred during the accounting period and typically comprises of net income arising from the income statement.

Hence, the Retained Earnings statement is based upon;

Retained Earnings + Net Income – Dividends.

Retained Earnings statement can be defined as a financial statement that enumerate changes in retained earnings for an organization over a specific period of time. The retained earnings statement is the statement of owner's equity that outlines details of changes in the amount of retained earnings (profits) over a specified period in an organization.

Hence, retained earnings changes are summarized in the retained earnings statement.

The main purpose of preparing a retained earnings statement is to boost investor's confidence and improve market value.

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