Objective 5&6: Statement of retained earnings and closing entries for a corporation and shareholders' section of the balance sheet and calculate return on equity..

What does a statement of retained earnings show?

changes in retained earnings during the year

What are retained earnings?

cumulative profit (or loss) since incorporation that has been retained

What does return on investment or equity evaluate?

how many dollars are earned for each dollar invested by shareholders

Two types of share capital that are part of Contributed Capital?

preferred and common shares

What is Contributed Capital?

total amount contributed by shareholders

What is considered to be the most important measure of a firm's profitability?

Return on equity or on investment

When must all temporary accounts (income statement accounts be closed by?)

The end of the accounting period

Balance in Retained Earnings must be?

Updated

What is contributed surplus?

amounts contributed from acquiring and retiring shares

What transactions affect retained earnings?

Earning a profit (incurring a loss) Declaring cash and stock dividends Other transactions