The trial balance needs to be prepared prior to preparation of the income statement.

Question

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The trial balance is a necessary preliminary step in the preparation of financial statements, including the income statement. It lists all the accounts and their balances and ensures that the total debits equal the total credits, a fundamental accounting principle. Only after preparing the trial balance can the financial statements, including the income statement, be accurately prepared.

The Trial Balance Needs to Be Prepared Prior to Preparation