Which of the following is the most critical step in constructing pro forma financial statements?
A)The first, and most critical, step in constructing a set of pro forma financial statements is the sales forecast.
B)The first, and most critical, step in constructing a set of pro forma financial statements is the balance sheet forecast.
C)The first, and most critical, step in constructing a set of pro forma financial statements is the developing a marketing forecast.
D)The first, and most critical, step in constructing a set of pro forma financial statements is the cash forecast.

Question

Quizplus · Accepted Answer

The most critical step in constructing pro forma financial statements is to develop a sales forecast. This forecast will drive the projections for all other financial statements, including the income statement, balance sheet, and cash flow statement. Without an accurate sales forecast, the rest of the projections will be inaccurate and unreliable.

Which of the Following Is the Most Critical Step in Constructing