The retained earnings statement is usually found in the financial statements along with the income statement and the balance sheet. The purpose of this statement is to reconcile the opening and closing balance of retained earnings. The statement of retained earnings should be reviewed to ensure that changes to equity go unnoticed. Some accountants believe that the statement of income and retained earnings are closely related and that it would be better to combine them. All items that affect net earnings and retained earnings appear in the same financial statement.
