In constructing a pro forma balance sheet a manager can estimate the accounts receivable because:
A)managers typically construct a pro forma income statement prior to the balance sheet.Thus,an estimate of sales has already been made and this is critical to estimating accounts receivable.
B)if the firm has already made an estimate of expected sales,then it can also estimate average daily sales.
C)if the firm maintains similar credit standards it can use the current average age of accounts receivable to help estimate the anticipated average age of accounts receivable
D)if the firm has each piece of information as stated above THEN they can estimate accounts receivable for the pro forma balance sheet..

Question

Quizplus · Accepted Answer

All the options provided (A, B, and C) contribute to the rationale for estimating accounts receivable in the construction of a pro forma balance sheet. They collectively explain how prior estimates of sales, understanding of average daily sales, and maintaining consistent credit standards can inform the estimation of accounts receivable. Therefore, if a firm has all the pieces of information mentioned, it can effectively estimate accounts receivable for the pro forma balance sheet.

In Constructing a Pro Forma Balance Sheet a Manager Can