Question

Which of the following financial statements is usually prepared first?

Select one:

A.

Statement of retained earnings.

B.

Income statement.

C.

Income tax return.

D.

Balance sheet.

Answer 1

Solution:

Income statement is usually prepared first because, retained earning statement can not be prepared without figure of net income and balance sheet cannot be prepared without getting ending balance of retained earnings. Further income tax return can not be prepared without net income

Hence option B is correct.