Arrange the following components of financial statements in the correct accounting sequence of preparation:(A) Cash Flow Statement(B) Balance Sheet(C) Profit and Loss A/c(D) Trading AccountChoose the correct answer from the options given below:
- A(A), (B), (C), (D)
- B(D), (A), (C), (B)
- C(D), (C), (B), (A)
- D(D), (B), (C), (A)
Solution & Step-by-step Explanation
The chronological order for preparing final accounts and financial statements is:Trading Account (D) - to ascertain Gross Profit/Loss.Profit and Loss Account (C) - to determine Net Profit/Loss.Balance Sheet (B) - to reveal the financial position as on a particular date.Cash Flow Statement (A) - prepared using data from the income statement and comparative balance sheets to depict cash inflows and outflows.Hence, the correct order is (D), (C), (B), (A).