The Primary Purpose in Preparing Pro Forma Financial Statements Is

question 112

Multiple Choice

The primary purpose in preparing pro forma financial statements is

• A) to ensure the ability to pay dividends.
• B) for risk analysis.
• C) for profit planning.
• D) for cash planning.

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Definitions:

List Price

The official selling price of a product or service before any discounts are applied.

Boot

Additional value or cash added to a transaction to even out an exchange or transfer of assets.

Fixed Asset

A fixed asset is a long-term tangible piece of property or equipment that a company owns and uses in its operations to generate income, not easily converted into cash.

Intangible

An intangible asset is an asset that lacks physical substance, such as intellectual property, goodwill, and licensing agreements.