Accounting for IGCSE & O level - Final Statements (Section 14 - No. 43)
Which of the following is the correct sequence of steps in preparing an income statement?
Calculate gross profit, follow the trial balance and transfer balances for sales, purchases, etc., and calculate profit/loss.
Follow the trial balance, calculate gross profit, and transfer balances for sales, purchases, etc., and calculate profit/loss.
Follow the trial balance, transfer balances for sales, purchases, etc., calculate gross profit, and calculate profit/loss.
Transfer balances for sales, purchases, etc., follow the trial balance, calculate gross profit, and calculate profit/loss.
Forklaring
The correct sequence involves starting with the trial balance, then transferring the relevant balances, calculating gross profit, and finally, calculating net profit or loss.