Which Financial Statement Must Be Prepared Before the Others

question 30

Multiple Choice

Which financial statement must be prepared before the others?

• A) balance sheet
• B) cash flow statement
• C) income statement
• D) retained earnings statement

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Definitions:

Perpetual Inventory System

An accounting method that records the sale or purchase of inventory immediately through computerized point-of-sale systems and Enterprise Resource Planning systems.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made at specific intervals, rather than continuously.

Purchases Discounts

Purchases discounts are reductions in price given by suppliers to buyers for early payment of invoices.

Credit Memo

A document issued by a seller to a buyer, reducing the amount that the buyer owes to the seller typically due to a return or an error in billing.