Question

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What are the three numbers that receive the most attention when evaluating a pro forma income statement?

Answer 1

1. Net sale 2. Cost of sale or cost of goods sold and 3. Operating Expenses, are three received the most attention when evaluting the pro forma statement.

Net sales: net sales is a total sum of company gross sales. In this total sales, minus or less the allowances (returned goods) and also discounts. Example , Revenue in income statement which represent the net sales, it is a key attention when we preparing the income statement

Cost of sales: cost of Sales or cost of goods both includes the direct cost. Direct cost associated with production of goods or services. Direct cost are direct material or direct labour if any direct cost or overhead related to production.

Operating expenses: Operating expenses which is incurred to run the day to day business operations. These Expense are not included in cost of goods sold but it's may be indirectly related to production but not directly related. For an example, Rent, Salary, marketing, adminstrative expenses if any.