The income statement should be prepared
A) before the statement of owner's equity and balance sheet
B) after the statement of owner's equity and before the balance sheet
C) after the statement of owner's equity and balance sheet
D) after the balance sheet and before the statement of owner's equity

Question

Quizplus · Accepted Answer

The income statement is prepared first because it provides the net income or loss, which is then used in preparing the statement of owner's equity. The balance sheet is prepared last, using information from both the income statement and the statement of owner's equity.

The Income Statement Should Be Prepared