Ending retained earnings = Beginning retained earnings + Net income − Dividends
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3.2. Accounting Equations mpany’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)
<span>Endingretainedearnings=Beginningretainedearnings+Netincome−DividendsEndingretainedearnings=Beginningretainedearnings+ Netincome−Dividends
Or, substituting Equation 3 for Net income, equivalently:
Equation (4b)
Endingretainedearnings=Beginningretainedearnings+Revenues−Expenses−Divide
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