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.

Question

Quizplus · Accepted Answer

Pro forma statements are future projections based on assumptions and estimates. They are not guarantees and can be affected by various factors such as market conditions, economic changes, and unexpected events. Therefore, it is important to use pro forma statements as a tool to forecast potential financial outcomes rather than rely on them as definite results.

Which One of the Following Statements Is Correct