Expanded Accounting Equation

Definition: Expands equity into its components: contributed capital, accumulated earnings, current period results, and distributions. This form shows how incom…

Equation

Assets = Liabilities + Common Stock + Retained Earnings + Revenue − Expenses − Dividends

Expands equity into its components: contributed capital, accumulated earnings, current period results, and distributions. This form shows how income statement activity (revenue minus expenses) flows into the balance sheet through retained earnings.

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