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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