Investors and analysts are sometimes urged to ignore traditional GAAP numbers and instead focus on nonstandard "pro forma" numbers because
A)the political compromises made to achieve consensus when issuing FASB pronouncements lead to inaccurate portrayals of underlying events.
B)management believes the pro forma numbers portray the company in a better light.
C)the pro forma numbers are closer to those reported under international reporting standards.
D)pro forma numbers are easier to understanD.

Question

Quizplus · Accepted Answer

Management may use pro forma numbers to portray the company in a more positive light by excluding one-time expenses or other items that may impact GAAP numbers negatively. Therefore, investors and analysts are sometimes urged to focus on nonstandard pro forma numbers, even though they may not fully comply with GAAP.

Investors and Analysts Are Sometimes Urged to Ignore Traditional GAAP