Complete Question:
Pro forma financial statements can best be described as financial statements:
A. showing projected values for future time periods.
B. expressed in real dollars, given a stated base year.
C. expressed in a foreign currency.
D. where the assets are expressed as a percentage of total assets and costs are expressed as a percentage of sales.
E. where all accounts are expressed as a percentage of last year's values.
Answer:
A. showing projected values for future time periods.
Explanation:
The term "Pro forma" is a Latin expression, which simply means “as a matter of form” or “for the sake of form.” The Pro forma financial statements are financial reports that gives insight about the economic activities of an organization that may have happened in the past or occur in the future, using assumptions, projections or hypothesis.
Simply stated, Pro forma financial statements can best be described as financial statements showing projected values for future time periods.
The Pro forma financial statements are often used for investment proposals, so as to draw investor's attention to a business.
However, it is worth of note, to state that Pro forma financial statements are not generally compliant with the Generally Accepted Accounting Principles (GAAP) or the International Financial Reporting Standards (IFRS).
Hence, it is being regulated by the Securities and Exchange Commission (SEC) under the regulation G.
