Four financial statements are usually prepared for a business.The statement of cash flows is usually prepared last.The retained earnings statement (RES),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,RES,B
B) B,I,RES
C) RES,I,B
D) B,RES,I

Question

Quizplus · Accepted Answer

The correct order is: Income Statement (I) first, because it provides the net income or loss which is needed for the Retained Earnings Statement (RES) next, which in turn adjusts the retained earnings for the period and is needed for the Balance Sheet (B) last.

Four Financial Statements Are Usually Prepared for a Business