Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The statement of stockholders' equity (SSE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?
A) I, SSE, B
B) B, I, SSE
C) SSE, I, B
D) B, SSE, I

Question

Quizplus · Accepted Answer

The income statement (I) is prepared first to determine the net income or loss for the period. This information is then used in the statement of stockholders' equity (SSE) to update the equity section. Finally, the updated equity information from the SSE is used in preparing the balance sheet (B).

Four Financial Statements Are Usually Prepared for a Business