In what order are the following financial statements prepared:

(1) balance sheet, (2) income statement, and (3) statement of stockholders' equity?

The financial statements are prepared in this order; income statement, balance sheet, and statement of stockholders' equity. (2,1,3)

Explanation:

The income statements contains the revenue and expenses, the net of which gives rise to a net income. The net income is what feeds into the retained earnings account to determine the closing balance of the retained earnings which is an element of the balance sheet.

After the income statement, the balance sheet is prepared. This shows the assets, liabilities and owners equity (of which retained earnings is a part).

The elements of the owners equity forms an integral part of the statement of stockholders' equity. Hence it is prepared after the balance sheet.