Choose the option below that reflects the correct order in which to prepare the three financial statements
A)Income Statement; Statement of Owner's Equity; Balance Sheet.
B)Statement of Owner's Equity; Balance Sheet; Income Statement.
C)Income Statement; Balance Sheet; Statement of Owner's Equity.
D)Balance Sheet; Income Statement; Statement of Owner's Equity.

Question

Quizplus · Accepted Answer

The correct order to prepare financial statements is: Income Statement, Statement of Owner's Equity, and then Balance Sheet. The Income Statement is prepared first to determine the net income or loss. This figure is then used in the Statement of Owner's Equity to show changes in the owner's equity. Finally, the Balance Sheet is prepared, using information from the Statement of Owner's Equity to present the financial position at a point in time.

Choose the Option Below That Reflects the Correct Order in Which