Which Of The Following Financial Statement Is Generally Prepared First

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    2022-12-26T00:59:13+05:30

    Which Of The Following Financial Statement Is Generally Prepared First

    Whenever you start a business, one of the first things you have to do is figure out how much money you’re going to need to sustain it. This involves understanding your expenses and making projections about how much revenue you’re likely to generate in the future. One of the most important financial statements is the income statement, which outlines your revenue and expenses over a specific period of time. But which financial statement is generally prepared first? The answer is the balance sheet. The balance sheet provides a snapshot of your company as of a particular point in time and allows you to make decisions about whether or not to invest in new assets or liabilities. So, if you want to know which financial statement is generally prepared first, start by understanding the basics of the balance sheet.

    Income Statement

    The income statement is generally prepared first, followed by the balance sheet. The income statement shows how much money the company has earned in a particular period and is key in deciding whether to invest in the company. The balance sheet shows the assets, liabilities, and equity of a company at a specific point in time.

    Balance Sheet

    A balance sheet is a financial statement that shows a company’s assets, liabilities, and net worth at a specific point in time. The majority of companies prepare their income statements first and then prepare their balance sheets. Income statements show how much money the company made in each fiscal quarter, while balance sheets show how much money the company has at any given point in time. A company’s net worth is determined by subtracting its liabilities from its assets.

    Cash Flow Statement

    Generally, the cash flow statement is prepared first. This statement displays a company’s ability to generate cash and manage its finances. It includes items like receipts and payments, changes in inventories, and new loans or debentures issued.

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