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What are pro forma financial statements?

Author:
Harold Averkamp, CPA, MBA

Definition of Pro Forma Financial Statement

A pro forma financial statement is one based on certain assumptions and projections (as opposed to the typical financial statement based on actual past transactions).

Example of Pro Forma Financial Statement

A corporation may want to see the effects of three possible financing options. Therefore, it prepares a projected balance sheet, income statement, and statement of cash flows for each of the three financing options. These projected financial statements are referred to as pro forma financial statements.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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