Pro-Forma Financial Statements Are Prepared Using the Information Developed in the Budget

question 18

Essay

Pro-forma financial statements are prepared using the information developed in the budget process.These statements reflect the results of operations and the financial position of the organization as if all actions planned in the budget had occurred.Many of the master budget components provide direct input to the pro-forma financial statements.

Required:

For each of the following components of the financial statements, indicate which pro-forma financial statement will show the item Income Statement or Balance Sheet and the budget within the master budget the item originated. Number 1 provides an example.

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Definitions:

Multinomial Experiment

An experiment involving outcomes that can fall into one of several categories, generalizing binomial experiments.

Fixed Number

A value that remains constant and does not change in different situations or equations.

Independent Trials

Refer to experiments or trials in which the outcome of any single trial does not affect the outcomes of any other trials.

Null Hypothesis

A statistically formulated assertion that posits no relationship or difference between two or more groups or factors, serving as a default position until evidence suggests otherwise.