What financial statement is prepared first?
Understand the Problem
The question is asking about the sequence of preparation for financial statements in accounting. Specifically, it seeks to know which financial statement is prepared first during the accounting cycle.
Answer
Income statement
The income statement is prepared first in the sequence of financial statements.
Answer for screen readers
The income statement is prepared first in the sequence of financial statements.
More Information
The income statement is crucial as it details a company's revenues and expenses, which determine the net income. This information is essential for preparing other financial statements like the balance sheet and cash flow statement.
Tips
Make sure to prepare the income statement first because it influences the figures in the balance sheet and cash flow statement.
Sources
- Guides on How to Prepare a Financial Statement - Expensify - use.expensify.com
- Which Financial Statement Is Prepared First? - Patriot Software - patriotsoftware.com
- Which Financial Statement Is Prepared First & Why? - EcomBalance - ecombalance.com
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