Financial statements are prepared in the following order
A) Balance sheet, statement of changes in equity, income statement
B) Statement of changes in equity, balance sheet, income statement
C) Income statement, balance sheet, statement of changes in equity
D) Income statement, statement of changes in equity, balance sheet
E) Balance sheet, income statement, statement of changes in equity

Question

Quizplus · Accepted Answer

The correct order for preparing financial statements is to start with the income statement, which shows the company's revenues and expenses. Next is the statement of changes in equity, which reflects changes in the company's equity from transactions and other events. Finally, the balance sheet is prepared, which presents the company's financial position at a point in time. This order ensures that the necessary information from the income statement and statement of changes in equity is available for preparing the balance sheet.

Financial Statements Are Prepared in the Following Order