A Pro Forma Statement Sets Out the Financial Predictions of a Company

question 28

Multiple Choice

A pro forma statement sets out the financial predictions of a company on an ________ basis-that is,it projects future performance based on a set of operating and sales assumptions.

• A)"all or nothing"
• B)"as if"
• C)"as a matter of fact"
• D)All of these

---

Definitions:

Specific Identification Method

An inventory costing method that tracks the actual cost of each specific item in inventory until it is sold.

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the investor’s share of the investee’s net assets.

Journal Entries

The method by which all business transactions are recorded in a company's accounting system, using debits and credits.

Other Comprehensive Income

Portions of total comprehensive income of a company not realized in net income, including items like foreign currency translation adjustments or unrealized gains on securities.