FBLA Accounting II Practice Test 2025 - Free Accounting Practice Questions and Study Guide

The statement of retained earnings specifically serves to disclose the changes in retained earnings over a particular period of time. This includes details about the net income earned during the period, any dividends declared to shareholders, and the retained earnings at the beginning and end of the period. This statement is essential for understanding how a company is accumulating profits and reinvesting in the business versus distributing earnings to shareholders.

Each of the other options presents distinct financial reports that focus on different areas. A report of total assets concentrates solely on what the company owns. A summary of all income and expenses pertains to the income statement, capturing profitability without focusing on retained earnings specifically. Lastly, a statement of cash flows outlines the cash inflows and outflows within a company over a specific timeframe, which is unrelated to the retained earnings specifically. Thus, the most accurate option regarding the statement of retained earnings is that it provides a disclosure of changes in retained earnings over time.