Why is the income statement the first financial report prepared?

Answer

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There is no required order for preparing financial statements. The income statement can be completed at any point in the financial reporting process.

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The income statement is prepared first because its result, Net Income, is needed as part of the other financial statements.

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The income statement is prepared first because its result, Net Income, is the most important financial measurement used by decision makers.

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The income statement is prepared first because accounts included on the income statement are all temporary accounts that must be closed before preparing the remaining financial statements.

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