The Income statement is always prepared first in order to determine
A) the total assets to be reported on the balance sheet.
B) the cash outflow of the company.
C) the profit or loss used in the Statement of changes in owner's equity.
D) the amount of investments or withdrawals used in the Statement of changes in owner's equity.

Question

Quizplus · Accepted Answer

The income statement is prepared first in order to determine the profit or loss of the company, which is then used in the Statement of changes in owner's equity. The total assets to be reported on the balance sheet are determined by the combination of the income statement, Statement of changes in owner's equity, and the Statement of cash flows. The cash outflow and amount of investments or withdrawals are reported in the Statement of cash flows, which is prepared after the income statement.

The Income Statement Is Always Prepared First in Order to Determine