Stat. of Retained Earnings Vs. Stat. of Owner Equity

[shunmas]

Hi !

They say the statement of retained earnings and statement of owner's equity are one and the same thing. However, as we know that in Statement of Retained Earnings, the starting point is Retained Earnings beginning balance. Let assume it is zero. Net Profit is added and any drawings are deducted to arrive at Retained Earnings closing balance, which is finally added to Capital Account in the balance sheet.

Whereas the starting point in Statement of Owner's Equity is Opening Capital. Net Profit is added and any drawings are deducted to arrive at Capital closing balance, which is finally shown in Balance Sheet.

Can anyone explain the difference between the two ?

[hariharm]

Retained Earnings is a part of Owners' equity.

Owners' Equity = assets - liabilities (therefore owners' equity includes capital and retained earnings)