The correct order for the preparation of financial statements is:
1. Statement of Cash Flows
2. Income Statement
3. Balance Sheet
4. Statement of Retained Earnings

Question

The correct order for the preparation of financial statements is: 
1. Statement of Cash Flows
2. Income Statement
3. Balance Sheet
4. Statement of Retained Earnings

Quizplus · Accepted Answer

The correct order for preparing financial statements starts with the Income Statement, which calculates net income or loss. This is followed by the Statement of Retained Earnings, which adjusts for dividends and the period's net income or loss. Next is the Balance Sheet, which is prepared using the updated retained earnings figure. Finally, the Statement of Cash Flows is prepared, which uses information from all the other statements.

The Correct Order for the Preparation of Financial Statements Is