Finance School of Management The Income Statement It is important to remember Retained earnings are not added to the cash balance of the firm but are added to shareholder s equity Accounts show historical values. not market values uesTc 1010 Finance School of Management ❖ It is important to remember – Retained earnings are not added to the cash balance of the firm, but are added to shareholder’s equity. – Accounts show historical values, not market values. The Income Statement