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ROLL RETAINED EARNINGS FROM BOOKS CLIENT GAVE US CURRENT YEAR TO PY BALANCE SHEET. why do we only look at balance sheet items and not income statement items when trying to find discrepancies for retained earnings comparing the ending balance of PY to beginning on current year. GL? why do we look at balance sheet items on the GL and not income statement items?

Yes, to roll retained earnings between PY books and what the client gave you, you need to look at the balance sheet items. The retained earnings balance at the end of the previous year should be equal to the retained earnings balance at the beginning of the current year. If there are any differences, you need to find out what caused them and make the necessary adjustments. Here are the steps involved in rolling retained earnings: 1. Get the retained earnings balance at the end of the previous year from the previous year's balance sheet. 2. Get the retained earnings balance at the beginning of the current year from the current year's balance sheet. 3. If the two balances are not equal, find the differences. The differences can be caused by several things, such as: - Net income or loss for the year - Dividends paid during the year - Prior period adjustments - Errors in the previous year's financial statements

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