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:

Exploitation

Involves taking unjust advantage of someone, often in a professional context, by imposing unfair working conditions or inadequate compensation.

Rank-and-File Members

Pertains to the regular members of an organization or union, excluding the leadership or managerial positions.

Framework of Procedures

A set of formalized steps and guidelines designed to accomplish a specific task or to uphold standards in various contexts, including organizations or regulatory environments.

Rigid Rules

Rules that are strictly applied and allow little to no flexibility or discretion in their implementation.