Group 5
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Questions and Answers

What is the purpose of the pro-forma entries in the provided text?

  • To adjust the salary loans receivable
  • To record loans granted to F. Santos
  • To update the cash balance in the bank
  • To reflect the net gain in the Statement of Activities (correct)
  • What is the impact of the pro-forma entries on the cash balance in the bank?

  • It decreases the cash balance
  • It depends on other transactions not mentioned in the text
  • It increases the cash balance
  • It has no impact on the cash balance (correct)
  • What should be included in the financial statements regarding the incurrence of the net gain?

  • A note explaining the reason for the net gain (correct)
  • A note about the adjustment of salary loans receivable
  • A note about the loans granted to F. Santos
  • A note detailing the pro-forma entries
  • Study Notes

    Pro-Forma Entries

    • Pro-forma entries are used to indicate the potential financial impact of a transaction or event that has not yet occurred.
    • They are typically used to forecast or predict the outcome of a particular situation.

    Impact on Cash Balance

    • Pro-forma entries do not affect the current cash balance in the bank, as they are hypothetical and do not represent actual transactions.
    • They are used for planning and forecasting purposes, rather than recording actual financial activity.

    Financial Statement Disclosure

    • When a net gain is incurred, it should be included in the financial statements to provide stakeholders with a complete and accurate picture of the company's financial performance.
    • The financial statements should include necessary disclosures regarding the nature and amount of the net gain, as well as any related assumptions or estimates.

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    Description

    Test your knowledge of accounting pro-forma entries with this quiz. Practice recording loans granted and cash transactions, and understand how to reflect gains in the Statement of Activities.

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