Questions: Four financial statements are usually prepared for a business: The statement of cash flows is usually prepared last. The statement of owner's equity (OE), the balance sheet (B), and the income statement (I) are prepared in what order? a. B, OE, I b. OE, I, B c. I, OE, B d. I, B, OE

The answer is the third one (c): I, OE, B.

Explanation for each option:

a. B, OE, I: This order is incorrect because the balance sheet relies on the owner's equity and the income statement to be completed first.

b. OE, I, B: This order is incorrect because the owner's equity statement depends on the net income or loss, which is derived from the income statement.

c. I, OE, B: This is the correct order. The income statement is prepared first because it calculates the net income or loss for the period. The statement of owner's equity is prepared next, as it uses the net income or loss from the income statement to determine the ending owner's equity. Finally, the balance sheet is prepared, which uses the ending owner's equity from the statement of owner's equity.

d. I, B, OE: This order is incorrect because the balance sheet should be prepared after the statement of owner's equity, not before.

Summary: The correct order for preparing the financial statements is: Income Statement (I), Statement of Owner's Equity (OE), and Balance Sheet (B).