Multiple Choice
Which of the following accounts is a temporary account?
4
views
3. Accrual Accounting Concepts
Closing Entries
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following financial statements is typically prepared last during the accounting cycle?
A
Income Statement
B
Balance Sheet
C
Trial Balance
D
Statement of Retained Earnings
Verified step by step guidance1
Understand the sequence of financial statement preparation in the accounting cycle. Typically, the financial statements are prepared in a specific order to ensure accuracy and logical flow.
The first statement prepared is the Income Statement, which summarizes revenues and expenses to calculate net income or net loss for the period.
Next, the Statement of Retained Earnings is prepared. This statement uses the net income (or net loss) from the Income Statement to update the retained earnings balance, factoring in dividends paid during the period.
The Trial Balance is not a financial statement but rather a tool used earlier in the accounting cycle to ensure that debits equal credits before preparing financial statements.
Finally, the Balance Sheet is prepared last. It uses information from the Statement of Retained Earnings and other accounts to present the financial position of the company, including assets, liabilities, and equity, as of the end of the accounting period.
2:37mWatch next
Master Introduction to Closing Entries:Temporary and Permanent Accounts with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Closing Entries practice set
Problem sets built by lead tutorsExpert video explanations