A company’s ending retained earnings is composed of the beginning balance (if any), plus net income, less any distributions to owners (dividends).
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3.2. Accounting Equations ed together through the retained earnings component of owners’ equity. Beginning retained earnings is the balance in this account at the beginning of the accounting period, and ending retained earnings is the balance at the end of the period. <span>A company’s ending retained earnings is composed of the beginning balance (if any), plus net income, less any distributions to owners (dividends). Accordingly, the equation underlying retained earnings is:
Equation (4a)
Endingretainedearnings=Beginningretainedearnings+Netincome−DividendsEndingretainedear
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