Question

38. Which is the FIRST financial statement that wi process? ll be completed in the forecasting a) Income Statement b) Balance Sheet c) Statement of Cash Flows d) Statement of Changes in Stockholders Equity 39. Which of the following is the first item to be forecast when proper methods are use a) Stockholder's Equity b) Comprehensive Income c) Total Revenues d) Total Assets e) Cash Flow From Operating Activities

Answer 1

38. a) Income Statement

Income Statement is a financial statement which shows financial performance of a firm during a period (such a year) whereas Balance sheets shows the balance of Assets and liabilities at end of period. Thus, in forecasting process, Income statement needed to be completed first as it contains the information about performance in that particular period. Figures from Income statement such as Net Income goes to Balance sheet and Cash flow statement.

39. b) Total Revenue

As discussed above, Income statement needed to be completed first for forecasting and the first item in Income statement is Total Revenues thus, Total Revenues is the first item to be forecast.

Hope this will help, please do comment if you need any further explanation. Your feedback would be appreciated.