Which of the Following Statements About Pro Formas Is True

question 65

Multiple Choice

Which of the following statements about pro formas is true?

• A)Because tax laws depend on the whims of politicians, pro formas are always done on a before-tax basis.
• B)The estimation errors in pro forma statements can be extremely large, in which case they are simply not worth the effort involved.
• C)The guidelines for developing a pro forma will be different depending on the type of business.
• D)Pro formas can predict sales levels easily, but they are not very useful in determining when cash might be needed and how much will be needed.

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