“A company’s income appears directly on the I.S. and the R.E. statement, and it is included indirectly in the company’s B.S". Do you agree?

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How are retained earnings related to a company's income statement?
Posted by:
Mohammad Iqbal Abubaker
05-February-2016

Accounting Finance

Question added by Muhammad Asif Jajja , Accountant , Pakistan Veterinary Medical Council
Date Posted: 2013/06/21

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by Md Shahidul Islam , Head of Finance & Accounts , Abdul Monem Limited (Coca-Cola)

Yes.
Net Income is the bottom line figure of Income Statement and this Net Income is transferred to Retained Earning Statement for necessary adjustments.
The bottom line figure of Retained Earning Statement is the Ending Balance of Retained Earnings, a part of Capital.
Since, Capital is reported in the Balance Sheet; it indirectly includes the Net Income reported by the Income Statement.

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by Muhammad Sohail Anwar , Finance Manager , The Food Concepts

Agreed.Income has been accumulated in the company's assets that is one of the reason of positive change in BS assets without change in liability and it goes to Retained earning.

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