The reasonableness and feasibility of short-term cash forecasts can be evaluated by preparing
A) A bank reconciliation
B) Pro forma financial statements
C) A Statement of Cash Flows
D) Interest coverage computations

Question

Quizplus · Accepted Answer

Pro forma financial statements project future financial results based on expected actions and events. By preparing these statements, an organization can evaluate the feasibility of short-term cash forecasts. The other options are not directly related to evaluating short-term cash forecasts. A bank reconciliation identifies differences between a company's bank account balance and its actual balance. A Statement of Cash Flows provides information about a company's cash inflows and outflows during a given period. Interest coverage computations relate to a company's ability to meet its debt obligations.

The Reasonableness and Feasibility of Short-Term Cash Forecasts Can Be