Accounting Online Program Certification Practice Test 2025 - Free Certification Practice Questions and Study Guide

The statement of retained earnings is typically prepared yearly as part of a company's financial reporting process. This statement outlines the changes in retained earnings over a reporting period, reflecting how much profit is retained in the business after paying dividends to shareholders.

Annual financial statements, including the statement of retained earnings, provide a comprehensive overview of a company's financial health and performance for the entire fiscal year. This aligns with the annual cycle of financial reporting, allowing stakeholders to understand how the company has managed its profits and distributions over the course of the year.

While entities may prepare interim financial reports more frequently, such as quarterly or monthly, the statement of retained earnings is most commonly included in the annual reports presented to shareholders and regulatory authorities. This reflects the long-term view of retained earnings, as it is primarily concerned with the accumulation of profits over time.