Choose the option below that reflects the correct order in which to prepare the three financial statements
A) Balance Sheet;Income Statement;Statement of Owner's Equity.
B) Income Statement;Statement of Owner's Equity;Balance Sheet.
C) Income Statement;Balance Sheet;Statement of Owner's Equity.
D) Statement of Owner's Equity;Balance Sheet;Income Statement.

Question

Quizplus · Accepted Answer

The correct order in which to prepare the three financial statements is Income Statement;Statement of Owner's Equity;Balance Sheet.

The Income Statement shows the revenues and expenses over a period of time, resulting in a net income or loss.

The Statement of Owner's Equity shows the changes in the owner's equity during that same period of time, including investments, withdrawals, and net income or loss.

The Balance Sheet shows the financial position of the company at a specific point in time, including its assets, liabilities, and owner's equity.

Therefore, the correct order is to prepare the Income Statement first, followed by the Statement of Owner's Equity, and then the Balance Sheet.

Choose the Option Below That Reflects the Correct Order in Which