Final answer:
The Retained Earnings balance on the balance sheet is not affected by stock splits, as they only change the number of shares and the price per share without altering shareholder equity or ownership percentages.
Step-by-step explanation:
The Retained Earnings balance reported on the balance sheet is typically not affected by a stock split. A stock split is a corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares. Although this can affect the number of shares outstanding, it does not change a company's equity or the individual shareholder's percentage of ownership. This means that retained earnings—which represent the accumulated net income of a company minus any dividends paid to shareholders—remain unchanged.
Stock splits do not involve the transfer of cash or any other type of asset, and they do not directly impact the financials as dividends or interests would. Since stock splits simply enlarge the number of shares while proportionally reducing the price per share, they do not have any real economic effect on the value of the company or on the account of retained earnings that is reported on the balance sheet.