There is a certain order in which a company prepares its financial statements. First, a company prepares its balance sheet.

Question

Quizplus · Accepted Answer

The income statement is typically prepared first, followed by the statement of retained earnings (if applicable), then the balance sheet, and finally the cash flow statement. The income statement provides necessary information (net income or loss) that is used to update the balance sheet through the statement of retained earnings.

There Is a Certain Order in Which a Company Prepares