Question

Our chapter covers addivity and articulation. What exactly do these terms mean? Do these concepts apply to financial forecasting? How?

Answer 1

Additivity means adding substance to something in small quantities to improve it.

Articulation means formation of clear and distinct clarity in notes produced.

Yes. These concepts apply to financial forecasting.

Forecast of financial statements should rely on the additivity within the financial statements and articulation accross these statements to avoid internal incnsistencies in forecasts.

The financial statements are not isolated items and they are closely related to each other to give a picture of the buiness financial statements. Each statement can stand alone offer snapshot of the given information. But separately they do not allow an indepth financial view as a whole. In order to review all the financial statements as a single picture, then additivity and articulation plays an important role in forecasting.