In what order are financial statements generally prepared?

Question

Quizplus · Accepted Answer

The income statement is prepared first to report a company's revenues and expenses over a specific period. The statement of retained earnings is then prepared to show how the net income or loss from the income statement affects the company's retained earnings. Finally, the balance sheet is prepared to show the company's financial position at the end of the period, based on its assets, liabilities, and equity. Therefore, the correct order is income statement, statement of retained earnings, and balance sheet.

In What Order Are Financial Statements Generally Prepared