Why Should the Income Statement Be Prepared First

question 29

Multiple Choice

Why should the income statement be prepared first?

• A)The statement of cash flows should be prepared first because it determines the sources of cash.That information is then used in preparing the income statement.
• B)Net income from the income statement flows into the retained earnings statement.The ending retained earnings balance then flows into the balance sheet.
• C)The income statement does not have to be prepared first.Financial statements can be prepared in any order.
• D)None of these answer choices are correct.

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Definitions:

Scatter Diagram

A graphical representation of data points to show the relationship between two variables, with one variable on each axis.

Categories

Groups or classes into which data or items are organized based on shared characteristics or properties.

Observations

The act of recording or the data recorded during an experiment or study, representing instances or examples of a phenomenon.

Dependent Variable

A variable whose value depends on one or more other variables, often examined in statistical models to understand the effect of independent variables.