The balance sheet should be prepared
A) before the income statement and the retained earnings statement
B) before the income statement and after the retained earnings statement
C) after the income statement and the retained earnings statement
D) after the income statement and before the retained earnings statement

Question

Quizplus · Accepted Answer

The income statement and the retained earnings statement report on a company's financial performance, while the balance sheet reports on its financial position. Thus, the balance sheet should be prepared after the income statement and the retained earnings statement, so that the ending balances for revenues, expenses, gains, losses, and dividends can be included in the appropriate categories on the balance sheet.

The Balance Sheet Should Be Prepared