When creating financial statements, why is it essential to create the income statement before the balance sheet? Because sales is an essential component of the balance sheet O Because net income is required to determine the balance in retained earnings Because cost of goods sold is a component of inventory O Because S&A costs are required to determine the balance in Plant & Equipment (net). Actually, the balance sheet must always be created first and used to create the income statement.

When creating financial statements, why is it essential to create the income statement before the balance sheet? Because sales is an essential component of the balance sheet O Because net income is required to determine the balance in retained earnings Because cost of goods sold is a component of inventory O Because S&A costs are required to determine the balance in Plant & Equipment (net). Actually, the balance sheet must always be created first and used to create the income statement.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

When creating financial statements, why is it essential to create the income statement before
the balance sheet?
O Because sales is an essential component of the balance sheet
O Because net income is required to determine the balance in retained earnings
Because cost of goods sold is a component of inventory
O Because S&A costs are required to determine the balance in Plant & Equipment (net).
O Actually, the balance sheet must always be created first and used to create the income statement.

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