Which of the following is the objective of preparing the income statement for the coming year?
A) To determine the current liabilities that change naturally with changes in sales
B) To determine funds that a firm must raise externally through new borrowing or by selling new stock
C) To determine the value of stock in the coming year
D) To determine the amount of retained earnings the company expects to generate during the year
E) To determine the total of cash flows from various activities during the year

Question

Quizplus · Accepted Answer

The objective of preparing an income statement for the coming year is to determine how much retained earnings the company can expect to generate during that year. The income statement shows the company's revenues, expenses, and net income, which can then be used to calculate the amount of retained earnings. Options A, B, C, and E are not the main objectives of an income statement.

Which of the Following Is the Objective of Preparing the Income