What are pro forma financial statements?
Pro forma financial statements are reports that summarize specific financial activities using a layout approved under the generally accepted accounting principles (GAAP). There are three widely used pro forma financial statements: balance sheet, income statement, and cash flow. All of these typically are included in any formal financial statement production, both for investors and for income tax evaluation. A balance sheet is designed to provide a summary of the balances in all the different financial accounts. Assets are listed on the left-hand side. Liabilities and owners or shareholder equity is on the right. The totals for each side must match.
