Question

In what order are the following financial statements prepared: (1) Balance sheet, (2) income statement, and (3) statement of stockholders' equity?
A. 1, 2, 3.
B. 3, 2, 1.
C. 1, 3, 2.
D.2, 3, 1.

Answer 1

Answer:

D.2, 3, 1.

Explanation:

The order of preparing the financial statement is described below:

1. Income statement

2. Statement of stockholder equity

3. Balance sheet

4. Cash flow statement

The income statement records all revenues generated and expenses incurred during a particular period.

The Statement of stockholder equity consists of common stock and the retained earning through which the ending balance could be computed.  

The balance sheet reports the assets and liabilities of the company

And, the cash flow statement analyzes the cash inflow and cash outflow position of the company