Question

what must be forecasted first in order to prepare the pro forma income statement?

○ sales

○ cost of goods sold

○ expenses

○ net income

Explanation:

To prepare a pro forma income statement, sales (revenue) is the starting point. Cost of goods sold, expenses, and net income are derived or calculated after sales is forecasted, as they depend on the level of sales (e.g., cost of goods sold is often a percentage of sales, expenses may be related to sales volume, and net income is sales minus costs and expenses).

Answer:

A. Sales