The ________ provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.
A) pro forma balance sheet
B) pro forma statement of cash flows
C) pro forma income statement
D) pro forms expense statement
E) pro forma statement of owners' equity

Question

Quizplus · Accepted Answer

The pro forma balance sheet provides information on a firm's assets, liabilities, and equity at a specific point in time. By creating a projection of the balance sheet, a firm can determine its ability to meet its short-term liabilities and plan for long-term financing needs. The pro forma income statement and statement of cash flows are useful for projecting future revenues and expenses, but they do not provide the same level of detail and insight into a firm's financial position. The pro forms expense statement and pro forma statement of owners' equity do not exist as commonly used financial statements.

The ________ Provides a Firm a Sense of How Its