When constructing a pro forma income statement,which of the following is likely to be calculated first among the items listed?
A)dividends
B)taxes
C)cost of goods sold
D)interest expense

Question

Quizplus · Accepted Answer

The cost of goods sold is likely to be calculated first as it is a major expense item and is necessary to determine gross profit, which is then used to calculate net income. Dividends and taxes are typically calculated after net income has been determined. Interest expense may be calculated before or after cost of goods sold, depending on the specific business model and financing structure.

When Constructing a Pro Forma Income Statement,which of the Following