Question: Which of the following financial statements is generally prepared first?
A Income statement
B Balance sheet
C Statement of retained earnings
D Statement of cash flows
Answer: Income statement
| Financial Statement | Description |
| Income Statement | · Income statement includes profit and Loss statements.
· Reports a company’s revenues, expenses and net income over a specific period, typically a fiscal year. · It provides an overview of a company’s profitability. |
| Balance Sheet | · Presents a snapshot of a company’s financial condition at a specific point in time.
· It lists assets, liabilities and equity, showcasing the company’s financial position. |
| Statement of Retained Earnings | · Details changes in a company’s retained earnings or owner’s equity over a period, including net income, dividends and other adjustments. |
| Statement of Cash Flows | · Tracks the inflow and outflow of cash and cash equivalents from operating, investing and financing activities.
· It provides insights into a company’s cash management. |