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In preparing final accounts, which statement is prepared first?

Practice Questions

Q1
In preparing final accounts, which statement is prepared first?
  1. Balance Sheet
  2. Income Statement
  3. Cash Flow Statement
  4. Statement of Changes in Equity

Questions & Step-by-Step Solutions

In preparing final accounts, which statement is prepared first?
  • Step 1: Understand that final accounts include two main statements: the Income Statement and the Balance Sheet.
  • Step 2: Know that the Income Statement shows the company's revenue and expenses to calculate profit or loss.
  • Step 3: Prepare the Income Statement first to find out if the company made money or lost money.
  • Step 4: Use the profit or loss from the Income Statement to help prepare the Balance Sheet.
  • Step 5: Remember that the Balance Sheet shows the company's assets, liabilities, and equity at a specific point in time.
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