What financial statement shows changes in net income and dividends over a period?

The Statement of Retained Earnings is the financial statement that specifically outlines changes in net income and dividends over a specific period. This statement starts with the beginning retained earnings, adds the net income (or subtracts net losses) from the period, and then deducts any dividends paid to shareholders. As a result, it provides a clear view of how the retained earnings of a company have changed over time due to these two primary factors.

The Balance Sheet, in contrast, provides a snapshot of a company's financial position at a specific point in time, including assets, liabilities, and equity, without detailing the changes that occurred during the period. The Income Statement summarizes revenues and expenses to show net income over a period, but it does not include the distribution of dividends or how that impacts retained earnings directly. The Statement of Cash Flows focuses on cash inflows and outflows from operating, investing, and financing activities, and while it may provide some insight into cash dividends paid, it does not specifically track the changes in retained earnings or net income.