Which of the following financial statements is generally prepared first?

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.