The statement of owner's equity should be prepared
A) before the income statement and after the balance sheet
B) before the income statement and balance sheet
C) after the income statement and balance sheet
D) after the income statement and before the balance sheet

Question

Quizplus · Accepted Answer

The statement of owner's equity shows the changes in the owner's capital account during the period, thus it should be prepared after the income statement because it uses the net income figure and before the balance sheet because it provides the ending capital balance which goes into the balance sheet. Therefore, the correct order is income statement, statement of owner's equity, and then balance sheet.

The Statement of Owner's Equity Should Be Prepared