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

Question

Quizplus · Accepted Answer

The income statement must be prepared first because it provides the net income or net loss figure, which is needed to prepare the statement of retained earnings. The statement of retained earnings, in turn, is needed for the balance sheet, and the cash flow from operating activities in the statement of cash flows often uses figures from the income statement and changes in balance sheet accounts.

Which Financial Statement Must Be Prepared Before the Others