The preparation of pro forma financial statements typically begins with the _____, followed by the _____ and then the _____.
A)balance sheet; income statement; statement of cash flows
B)statement of cash flows; income statement; balance sheet
C)income statement; balance sheet; statement of cash flows
D)income statement; statement of cash flows; balance sheet
E)balance sheet; statement of cash flows; income statement

Question

Quizplus · Accepted Answer

The preparation of pro forma financial statements typically begins with the income statement, followed by the balance sheet and then the statement of cash flows. This order makes sense as the income statement provides information on the company's revenue and expenses, which are necessary for calculating net income. The balance sheet can then be prepared using information on assets, liabilities, and equity, while the statement of cash flows can be constructed using information from both the income statement and balance sheet.

The Preparation of Pro Forma Financial Statements Typically Begins with the _____