Information flows among financial statements in this order:
A)statement of financial position to statement of changes in equity to statement of comprehensive income to statement of income.
B)statement of income to statement of changes in equity to statement of comprehensive income to statement of financial position.
C)statement of income to statement of comprehensive income to statement of changes in equity to statement of financial position.
D)statement of changes in equity to statement of financial position to statement of comprehensive income to statement of income.

Question

Quizplus · Accepted Answer

The correct flow of information among financial statements starts with the statement of income (which shows the company's profit or loss), then moves to the statement of comprehensive income (which includes all other comprehensive income items not included in the statement of income), followed by the statement of changes in equity (which reflects changes in the company's equity from transactions with owners and comprehensive income), and finally to the statement of financial position (balance sheet), which shows the company's financial position at a point in time. This sequence ensures that the outcomes of operations and other comprehensive income are reflected in equity before the equity is presented in the statement of financial position.

Information Flows Among Financial Statements in This Order