Which financial statement must be prepared before the others?
A) balance sheet
B) cash flow statement
C) income statement
D) retained earnings statement

Question

Quizplus · Accepted Answer

The income statement must be prepared before the other financial statements because it provides information about the company's revenues and expenses during a specific period, which is necessary to determine the net income or loss. The information from the income statement is then used to prepare the balance sheet and cash flow statement. The retained earnings statement is prepared after the other financial statements using information from the balance sheet and income statement.

Which Financial Statement Must Be Prepared Before the Others