Financial Statements Are Typically Prepared in the Following Order

question 38

Multiple Choice

Financial statements are typically prepared in the following order:

• A)Balance sheet,statement of owner's equity,income statement.
• B)Statement of owner's equity,balance sheet,income statement.
• C)Income statement,balance sheet,statement of owner's equity.
• D)Income statement,statement of owner's equity,balance sheet.
• E)Balance sheet,income statement,statement of owner's equity.

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Definitions:

Unrecorded Expense

A cost or liability that has been incurred but not yet documented or included in the financial records or statements of a company.

Unrecorded Revenue

Earnings from completed transactions or delivered goods/services that have not yet been documented in the financial accounts.

GAAP

Generally Accepted Accounting Principles, which are a common set of accounting rules and standards used in the United States for financial reporting.

Accrual Basis

An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when the cash transactions occur.