The normal order in which the financial statements are prepared is:
A)Balance sheet,income statement,statement of retained earnings.
B)Income statement,statement of retained earnings,balance sheet.
C)Income tax return,income statement,balance sheet.
D)Income statement,annual report,balance sheet.

Question

Quizplus · Accepted Answer

The standard order for preparing financial statements is to begin with the income statement, followed by the statement of retained earnings, and then end with the balance sheet. This order represents the chronological flow of business activities, with revenue and expenses being recorded first, followed by changes in retained earnings, and finally resulting in the financial position of the company as shown on the balance sheet. The options A, C, and D are incorrect because they do not follow this standard order.

The Normal Order in Which the Financial Statements Are Prepared