What is the correct order of the following steps in preparing a projected income statement (not all steps may be shown)?

I. Project future net sales
II. Project future net income
III. Project future cost of goods sold
IV. Project future interest expense

A)I, II, III, IV
B)II, IV, III, I
C)I, III, II, IV
D)I, III, IV, II

Question

What is the correct order of the following steps in preparing a projected income statement (not all steps may be shown)?

I. Project future net sales
II. Project future net income
III. Project future cost of goods sold
IV. Project future interest expense

A)I, II, III, IV
B)II, IV, III, I
C)I, III, II, IV
D)I, III, IV, II

Quizplus · Accepted Answer

The correct order for preparing a projected income statement starts with projecting future net sales (I), then projecting future cost of goods sold (III), followed by projecting future interest expense (IV), and finally projecting future net income (II). This sequence aligns with the logical flow of an income statement where sales and costs are determined first to calculate gross profit, then operating expenses and interest are considered, leading to the determination of net income.

What Is the Correct Order of the Following Steps in Preparing