Question

In which order are financial statements typically prepared?

1) Income statement, balance sheet, cash flow statement
2) Balance sheet, income statement, cash flow statement
3) Cash flow statement, balance sheet, income statement
4) Income statement, cash flow statement, balance sheet

Answer 1

The order in which financial statements are typically prepared is income statement, cash flow statement, and balance sheet.

Step-by-step explanation:

The correct order in which financial statements are typically prepared is 4) Income statement, cash flow statement, balance sheet.

1. The income statement shows the company's revenues, expenses, and net income or loss for a specific period of time.
2. The cash flow statement shows the company's cash inflows and outflows during a specific period of time.
3. Finally, the balance sheet shows the company's assets, liabilities, and shareholders' equity at a specific point in time.