Which financial statement details changes in equity from retained earnings?

The Statement of Retained Earnings provides a detailed account of changes in equity specifically related to retained earnings over a specific period. This financial statement outlines how the beginning balance of retained earnings is adjusted for net income (or loss) during the period, as well as any dividends distributed to shareholders. It directly links the company’s profits and losses to its retained earnings, thus showcasing how much of the earnings are being retained within the company for reinvestment versus paid out as dividends. This statement is essential for stakeholders who want to understand how retained earnings contribute to the overall equity of the company, making it vital in assessing the company's financial health and growth potential.

In contrast, the Income Statement focuses on the company’s revenues and expenses over a specific period to determine net income but does not break down how that income affects retained earnings specifically. The Balance Sheet provides a snapshot of the company’s assets, liabilities, and total equity at a particular point in time but does not show the flow of retained earnings across periods. The Statement of Cash Flows outlines cash inflows and outflows but doesn't specifically detail changes in retained earnings or how those relate to equity.