The Reasonableness and Feasibility of Short-Term Cash Forecasts Can Be

question 45

Multiple Choice

The reasonableness and feasibility of short-term cash forecasts can be evaluated by preparing

• A) A bank reconciliation
• B) Pro forma financial statements
• C) A Statement of Cash Flows
• D) Interest coverage computations

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Definitions:

Liabilities Assumed

Obligations that a company takes on as part of a transaction, such as purchasing another company or assets.

Identifiable Assets

Assets that can be separated and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract.

Measurement

The process of determining the monetary amounts at which the elements of the financial statements are to be recognised and carried in the statement of financial position or recognised in the statement of profit or loss and other comprehensive income.

Discount Rate

The discount rate is the interest rate used in discounted cash flow analysis to determine the present value of future cash flows.