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#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
[...] is a component of owners’ equity and links the “as of” balance sheet equation with the “activity” equation of the [...]
Answer
Retained earnings

income statement.

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
[...] is a component of owners’ equity and links the “as of” balance sheet equation with the “activity” equation of the [...]
Answer
?

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
[...] is a component of owners’ equity and links the “as of” balance sheet equation with the “activity” equation of the [...]
Answer
Retained earnings

income statement.
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Retained earnings is a component of owners’ equity and links the “as of” balance sheet equation with the “activity” equation of the income statement.

Original toplevel document

3.2. Accounting Equations
gretainedearnings+Revenues−  Expenses−Dividends As its name suggests, retained earnings represent the earnings (i.e., net income) that are retained by the company—in other words, the amount not distributed as dividends to owners. <span>Retained earnings is a component of owners’ equity and links the “as of” balance sheet equation with the “activity” equation of the income statement. To provide a combined representation of the balance sheet and income statement, we can substitute Equation 2 into Equation 1a. This becomes the expanded accounting equation:

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