Pro Forma Financial Statements Are Based on Which One of the Following

question 28

Multiple Choice

Pro forma financial statements are based on which one of the following?

• A)projected future income, cash flows, and other noncash items
• B)historical revenue and expenses
• C)historical asset and liability values
• D)current period cash flows
• E)current period revenues and expenses

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Definitions:

Legal Entity

An entity recognized by law as separate from its owners, possessing legal rights to enter contracts, sue, and be sued.

Tax Information

Relevant data and documents related to tax laws, filing requirements, rates, and deductions applicable to individuals or businesses.

IRS

The Internal Revenue Service, a U.S. government agency responsible for the collection of taxes and enforcement of tax laws.

C Corporation

A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity.