Remember: Pro forma means the statement is a projection or estimate. If you are just starting a
business, you won’t have any accounting records yet. Regular financial statements are done the same
way, they just use the actual numbers.
This statement describes the
cash going in and out of the
business over a period of time.
Steps to create:
1. Estimate your monthly cash
receipts:

Cash sales, collected
Accounts Receivable, money
from banks or investors
2. Estimate your monthly cash
disbursements (cash paid out)

Cost of goods, rent, taxes,
payroll, supplies, utilities,
insurance, loans
3. Cash receipts-cash disbursements=
Net cash flow
This statement shows expenses
and revenues incurred over a
period of time, and the net
income (profit) or net loss.
Steps to create:
1. Revenue: sales
2. Costs of Goods Sold: inventory
costs
3. Gross Profit (Revenue-Cost of
Goods Sold)
4. Operating Expenses: rent, utilities,
advertising, insurance, supplies,
payroll
5. Net Income Before Taxes
6. Taxes
7. Net Income/Loss After Taxes
This statement shows what is owned, what is owed, and the equity at a specific
point in time.
Assets=Liabilities + Owner’s Equity (Accounting Equation)
Steps to create:
1. List and total assets (cash, equipment, supplies, accounts receivable)
2. List and total liabilities (loans, accounts payable)
3. Add liabilities to owner’s equity and that total should equal your assets!