Which One of the Following Statements Is Correct

question 77

Multiple Choice

Which one of the following statements is correct?

• A)Pro forma statements must assume that no new equity is issued.
• B)Pro forma statements are projections, not guarantees.
• C)Pro forma statements are limited to a balance sheet and income statement.
• D)Pro forma financial statements must assume that no dividends will be paid.
• E)Net working capital needs are excluded from pro forma computations.

---

Definitions:

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, essentially the net worth belonging to the owners.

Assets

Resources with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.

Liabilities

Financial obligations or debts that a company owes to others, which need to be paid back in the future.

Owners' Equity

The portion of a company's assets that belongs to its owners or shareholders, representing their residual interest.