Question

What is the correct sequence of the following in the preparation of periodical financial statements?
I. Preparation of Balance sheet
II. Preparation of Funds flow statement
III. Preparation of Trial balance
IV. Preparation of Profit/Loss statement
Select the correct answer from the codes given and mark your answer sheet accordingly.

• A. IV, II, I, III
• B. III, IV, I, II
• C. II, IV, III, I
• D. I, III, II, IV

Answer 1

Answer: (B)

III, IV, I, II

Once all the transactions are recorded in the books of account then only process of preparing the financial statements starts. The sequence of preparation of financial statement is as under:

III - Preparation of Trial Balance

IV- Preparation of Profit & Loss Account

I - Preparation of Balance Sheet

II - Preparation of Funds Flow Statement