Pro forma financial statements are based on which one of the following?
A)projected future income, cash flows, and other noncash items
B)historical revenue and expenses
C)historical asset and liability values
D)current period cash flows
E)current period revenues and expenses

Question

Quizplus · Accepted Answer

Pro forma financial statements are based on projected future income, cash flows, and other noncash items. This allows companies to create hypothetical financial statements that show how they expect to perform in the future based on certain assumptions and projections. Historical financial statements would not be useful for this purpose as they only show past performance. Current period cash flows, revenues, and expenses can also help inform projections, but they alone are not sufficient to create a complete pro forma statement.

Pro Forma Financial Statements Are Based on Which One of the Following