Where does the information for a company's financial statement come from?

Where does the information for a company's financial statement come from?

• A. Trial balance
• B. Income statement
• C. Summary of accounts in the general ledger
• D. Balance sheet

Answer: (C)

Financial statements are built from the general ledger. Every transaction is posted to specific accounts, and the ledger provides the balances for assets, liabilities, equity, revenues, and expenses. Those account balances are what feed the income statement and balance sheet. The trial balance is a helpful check to ensure the ledger balances balance (debits equal credits) and to assist in preparing the statements, but it isn’t the source of the statements itself. So the summary of accounts in the general ledger is the source the statements draw from.

Financial statements are built from the general ledger. Every transaction is posted to specific accounts, and the ledger provides the balances for assets, liabilities, equity, revenues, and expenses. Those account balances are what feed the income statement and balance sheet. The trial balance is a helpful check to ensure the ledger balances balance (debits equal credits) and to assist in preparing the statements, but it isn’t the source of the statements itself. So the summary of accounts in the general ledger is the source the statements draw from.