Because of the links among financial statements, they must be prepared in order.Which of the following correctly describes the order of preparation?
A)Income statement, statement of comprehensive income, statement of changes in equity, and balance sheet.
B)Income statement, balance sheet, statement of comprehensive income, and statement of changes in equity.
C)Balance sheet, income statement, and statement of changes in equity.
D)Balance sheet, statement of changes in equity, income statement, and statement of comprehensive income.

Question

Quizplus · Accepted Answer

The correct order starts with the Income Statement, which calculates net income. Net income is then used in the Statement of Comprehensive Income (if prepared separately). The Statement of Changes in Equity needs the net income figure to show changes in equity. Finally, the Balance Sheet is prepared, utilizing information from all the previous statements.

Because of the Links Among Financial Statements, They Must Be