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