Arrange Financial Statements in Correct Sequence-
(A) Cash Flow Statement
(B) Balance Sheet
(C) Profit and Loss A/c
(D) Trading Account
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (D), (C), (B), (A)
Each statement uses a figure produced by the one before it, which fixes the order:
(D) Trading Account — prepared first, to find the gross profit or gross loss on buying and selling goods.
(C) Profit and Loss A/c — starts from the gross profit, charges the other expenses and arrives at the net profit or net loss.
(B) Balance Sheet — shows the position on the closing date, with the net profit added to the owners’ funds.
(A) Cash Flow Statement — prepared last, from the statement of profit and loss and the balance sheets of the current and previous years.