Question

Which of the following is not a typical adjustment made to the income statement for projection purposes?

a. Adjusting net income for perceived under- or over-accruals.
b. Adjusting revenues to only include organic revenue growth.
c. Separating operating and non-operating items.
d. Removing transitory items such as restructuring charges.
e. None of the above.

Answer 1

The correct answer is b. Adjusting revenues to only include organic revenue growth.

Step-by-step explanation:

One of the quantitative planning techniques is the projection of financial statements or also called pro forma statements.

The applications that can be had among others are the following:

Know how the year will end for tax purposes in terms of income and deductions in order to make decisions before the end of the year.

Another application will be to know the external financing needs for the period you want to know.

The most common and practical method of projecting financial statements is based on sales.