Question $16(6$ points$)$

Explain how the Statement of Retained Earnings $($alternatively: Statement of Changes in Equity$)$ and the Balance Sheet connect. For instance: How do you derive one through the other in the preparation of the statements? What accounts or mechanisms connect the two statements? Go beyond a one$-$sentence answer, but keep the answer to the point $($approx$.1$ paragraph$).$ Marks will be given based on clarity and completeness.