The amount extended to the Retained Earnings line in the Balance Sheet column of the work sheet is not the amount to be reflected for Retained Earnings on the balance sheet.

Question

Quizplus · Accepted Answer

The amount extended to the Retained Earnings line in the Balance Sheet column of the work sheet is a temporary adjustment to determine net income or loss for the period, but it is not the final amount to be reflected for Retained Earnings on the balance sheet. The final amount for Retained Earnings on the balance sheet is calculated by adding the beginning balance of Retained Earnings to the net income or loss for the period and subtracting any dividends declared.

The Amount Extended to the Retained Earnings Line in the Balance