Financial statements are typically 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: first, the income statement, which shows the company's financial performance over a specific period. Next, the statement of changes in equity, which reflects changes in the company's equity. Finally, the balance sheet, which presents the company's financial position at a specific point in time. This sequence ensures that the necessary information from the income statement and the statement of changes in equity is available to accurately prepare the balance sheet.

Financial Statements Are Typically Prepared in the Following Order