Which Financial Statement Must Be Prepared Before the Others

question 70

Multiple Choice

Which financial statement must be prepared before the others?

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

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Definitions:

Increase Stockholders' Equity

Refers to the growth in the equity portion of a company's balance sheet, signifying a rise in the net assets owned by shareholders.

Transactions

Financial events or exchanges that affect a company's assets, liabilities, or equity, and must be recorded in the accounting records.

Decrease Stockholders' Equity

A reduction in the value of ownership interest in a company, often due to losses, dividend payments, or share buybacks.

Income Statement

A financial document that reports a company's revenues, expenses, and net income over a specific period.