The natural progression in items from one statement to another and preparation of financial statements is best represented by the following order:
A) Balance sheet and statement of cash flows $ $ statement of retained earnings $ $ income statement
B) Balance sheet and statement of cash flows $ $ income statement $ $ statement of retained earnings.
C) Statement of retained earnings $ $ income statement $ $ balance sheet and statement of cash flows
D)Income statement $ $ statement of retained earnings $ $ bal ance sheet and statement of cash flows

Question

The natural progression in items from one statement to another and preparation of financial statements is best represented by the following order: 
A) Balance sheet and statement of cash flows $ > $ statement of retained earnings $ > $ income statement
B) Balance sheet and statement of cash flows $ > $ income statement $ > $ statement of retained earnings.
C) Statement of retained earnings $ > $ income statement $ > $ balance sheet and statement of cash flows
D)Income statement $ > $ statement of retained earnings $ > $ bal ance sheet and statement of cash flows

Quizplus · Accepted Answer

The correct order starts with the income statement, which shows the company's revenues and expenses. The net income or loss from the income statement is then used in the statement of retained earnings to show changes in retained earnings over the period. Finally, the updated retained earnings figure is used in the balance sheet, which also influences the statement of cash flows.

The Natural Progression in Items from One Statement to Another > > >

The Natural Progression in Items from One Statement to Another $>$