The income statement should be
The income statement should be prepared
after the balance sheet and before the retained earningsstatement
after the retained earnings statement and before the balancesheet
before the retained earnings statement and balance sheet
after the retained earnings statement and balance sheet
Answer:
C) before the retained earnings statement and the balancesheet.
(Because the retained earnings will be affected by the amount ofprofit/loss which is derived from the income statement. If a profitoccurs retained earnings will increase as profit will be added toit. If a loss occurs retained earnings will decrease as loss willbe deducted from it. Finally, after adjusting the retained earningswith the appropriate profit or loss it will be shown on the balancesheet under stockholder’s equity. Therefore income statement isprepared first.)
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