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What is the difference between proforma financial statements and projected financial statements?

Anonymous

∙ 11y ago

Updated: 9/16/2023

Pro forma financial statements are based off of historical statements and include a select few changes or exclusions "as a matter of form" (hence the name). For example, addition of debt or exclusion of extraordinary one-time expense. "Projected financial statements" (aka projections) can be made from scratch and are based off of many different assumptions, few or none of which are based on actual performance. Hope this helps!

Source: my recent completion of a formal commercial bank credit training program.

Wiki User

∙ 11y ago

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Continue Learning about Accounting

What is a pro forma balance sheet?

Proforma balance sheet is a projected balance sheet to predict the future of business.

What information does sales budget provide?

Sales budget provides the information about how many units of products needs to be sold and it is the basic information on which remaining budgets are prepared like production budgets or proforma financial statements.

Can proforma invoice be used in annual accounts?

Yes, Proforma invoice can be used in Annual Accounts to define the preliminary invoices with a quotation for each financial account in all companies.

How can you prepare the proforma balance sheet?

how can you prepare the proforma balance sheet?

What is the difference between Proforma Invoice and Commercial Invoice?

Proforma Invoice is not a real invoice, it is simply a confirmation of the purchase order before shipment of goods. Commercial invoice is what the vendor bills you after the goods have been delivered. Hence proforma invoice is not recorded as a liability on the books while the commercial invoice is. Many times, before establishing a credit relationship with the vendor, the vendor will present a Proforma invoice to request a payment in advance (PIA) before shipping the order.

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Related Questions

3 In developing of the proforma financial statements the last step in the process is the development of the?

statement of retained earnings

The key initial element in developing proforma statements is?

The key initial element in developing proforma statements is sales forecast.

What are the proforma journal entries?

Proforma journal entries are hypothetical journal entries prepared before actual transactions occur. They help in understanding the potential impact of transactions on financial statements. These entries are used for forecasting and planning purposes.

What is the definition of performa?

Performa is a mis-spelling of proforma. Use Proforma: Description of financial statements that have one or more assumptions or hypothetical conditions built into the data. Often used with balance sheets and income statements. Example: Provided to show rent or income projections upon acquisition of Commercial Real Estate, or a Business so as to justify obtaining of financing for the purchase - Used to demonstrate the Borrower's ability to repay the loan based on income projections taking into account Mortgage or loan terms, and actual or projected income based on reasonable and qualified assumptions.

What is a pro forma balance sheet?

Proforma balance sheet is a projected balance sheet to predict the future of business.

Why use a proforma income statement?

Proforma income statements often are used as planning tools and financial analysis. They usually are based on past information. But they can be drawn by estimating and making assumptions based on figures and results in other, similar situations. Proforma income statements project expenses and revenue into the future for a specified number of quarters or years. They often are created for making significant decisions, such as launching a new product line, expanding production, considering a merger, etc. For more information, go to aaupwiki.princeton.edu/index.php/Proforma_Financial_Statement.

What information does sales budget provide?

Sales budget provides the information about how many units of products needs to be sold and it is the basic information on which remaining budgets are prepared like production budgets or proforma financial statements.

Can proforma invoice be used in annual accounts?

Yes, Proforma invoice can be used in Annual Accounts to define the preliminary invoices with a quotation for each financial account in all companies.

What is the difference between a quotation and a proforma invoice?

Quotation is the preliminary prices with terms and conditions submitted or introduced to the customer, once quotation approved then a proforma invoice is issued and signed by the customer.

Pro-forma balance sheet?

Proforma: Description of financial statements that have one or more assumptions or hypothetical conditions built into the data. Often used with balance sheets and income statements. Example: Provided to show rent or income projections (typically it is the NOI - Net Operating income - that is looked at in this application) upon acquisition of Commercial Real Estate or a Business, so as to justify the obtaining of financing for the purchase - Used to demonstrate the Borrower's ability to repay the loan based on income projections taking into account Mortgage or loan terms, and actual or projected income based on reasonable and qualified assumptions.

How can you prepare the proforma balance sheet?

how can you prepare the proforma balance sheet?

What does performa invoice mean?

Performa is a mis-spelling of proforma. Look up proforma.

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