The term pro forma (occasionally written proforma) comes from a Latin phrase meaning, "as a matter of form". Its meaning depends on the context in which it is used.
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General
Doing something in a pro forma manner is to do it in a perfunctory way to satisfy the minimum requirements or to conform to a convention or doctrine.
Sometimes a pro forma, or proforma, can refer to a partially completed document, designed by one person to be fully completed and returned by a number of others. A document (noun is a bounded physical representation of body of Information designed with the capacity (and usually intent to Communicate. The aim is to standardise the information returned to the designer. Usually, a pro forma would contain pointers guiding a user in its completion.
A price quotation prepared in the form of an invoice, a pro forma invoice, is different from commercial invoices. It is used to create a sale and is sent in advance of the commercial invoice. The content of a pro forma invoice is almost identical to a commercial invoice and is usually considered a binding agreement although the price might change in advance of the final sale.
For establishment of LC or for advance payment by the importer through his bank, usually banks prefer a pro forma invoice to a quotation.
In some countries, the US for example, Customs may accept a pro forma invoice (generated by the US importer and not the exporter) if the required commercial invoice is not available at the time when filing entry documents (entry - the process of filing documents with US Customs at the port of entry to get goods released from Customs). U. S. Customs may use a pro forma invoice to assess duty and examine goods. The importer on record however, is required to post a bond and produce a commercial invoice within 120 days from the date of entry. If the required commercial invoice is needed for statistical purposes the importer has to produce the commercial invoice within 50 days from the date Customs releases the goods to the importer.
Business
A pro forma document is provided in advance of an actual transaction. Such a document serves as a model for the actual documents of the transaction. For example, when a new corporation is envisioned, its founders may prepare a business plan containing pro forma financial statements, such as projected cash flows and income statements. A business plan is a formal statement of a set of business goals the reasons why they are believed attainable and the plan for reaching those goals Financial statements (or financial reports) are formal records of a business' financial Cash flow (also called net cash flow) is the balance of the amounts of Cash being received and paid by a business during a defined period of time sometimes tied An Income Statement, also called a Profit and Loss Statement (P&L is a financial statement for companies that indicates how Revenue (money In addition, pro forma operating figures or profit and/or loss figures may be preferred or even demanded by investors when the actual figures are known to be inaccurate because of sloppy or suspected falsified business accounting practices. Pro forma figures should be clearly labeled as such and the reason for any deviation from reported past figures clearly explained.
In trade transactions, a pro forma (or proforma) invoice is a document that states a commitment from the seller to sell goods to the buyer at specified prices and terms. An invoice or bill is a commercial document issued by a seller to the Buyer, indicating the products quantities and agreed Prices It is used to declare the value of the trade. It is not a true invoice, because it is not used to record accounts receivable for the seller and accounts payable for the buyer. Accounts receivable (A/R is one of a series of Accounting transactions dealing with the Billing of customers who owe money to a person company or organization for Accounts payable is a file or account that contains Money that a person or company owes to Suppliers, but hasn't paid yet (a form of Debt)
Legal proceedings
Pro forma court rulings are intended merely to facilitate the legal process (to move matters along).
Accounting
Some companies report pro forma earnings, in addition to actual earnings calculated under the Generally Accepted Accounting Principles ("GAAP"), in their quarterly and yearly financial reports. Income, refers to consumption opportunity gained by an entity within a specified time frame which is generally expressed in monetary terms Generally Accepted Accounting Principles (GAAP is the standard framework of guidelines for Financial accounting. Financial statements (or financial reports) are formal records of a business' financial
The pro forma accounting is a statement of the company's financial activities while excluding "unusual and nonrecurring transactions" (unusual and nonrecurring expenses) when stating how much money the company actually made. In common usage an expense or expenditure is an outflow of Money to another person or group to pay for an item or service or for a category of costs Expenses often excluded from pro forma results include company restructuring costs, a decline in the value of the company's investments, or other accounting charges, such as adjusting the current balance sheet to fix faulty accounting practices in previous years.
Companies that report a pro forma income statement or balance sheet usually do so because, they say, the unusual events being excluded really were unusual, so the GAAP financial reports required by law are misleading to investors and potential investors. The crisis that happened this last quarter is not going to recur in future quarters, so the pro forma results can be used by investors to forecast what a "regular" quarter might portend in the future.
Critics note that pro forma numbers always look more profitable than GAAP numbers, and state that many companies intentionally use pro forma results in order to mislead investors into believing the company is in much better financial shape than it is; that there is no defined meaning or accounting standard for "pro forma" and that it is therefore impossible to make an "apples to apples" comparison between companies with pro forma results in the way that GAAP accounting allows; and that most "unusual events" reported as such are part of the ordinary course of business and should be reported as such. Most companies in most capitalist countries restructure themselves often, for example, so, it is argued, it is dishonest to claim that restructuring charges are unusual, one-time events that investors should not anticipate in the future.
There was a boom in the reporting of pro forma results starting in the late 1990s, with many dot-com companies using the technique to recast their losses as profits, or at least to show smaller losses than the GAAP accounting showed. The U.S. Securities and Exchange Commission requires publicly traded companies in the United States to report GAAP-based financial results, and has cautioned companies that using pro forma results to obscure GAAP results would be considered fraud if used to mislead investors. The US Securities and Exchange Commission (commonly known as the SEC) is an independent agency of the United States government which holds primary responsibility
Legislation
In certain Commonwealth nations, such as Canada the United Kingdom and Australia, pro forma bills are introduced immediately before consideration of the Speech from the Throne. Country to "Dominion of Canada" or "Canadian Federation" or anything else please read the Talk Page The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located For a topic outline on this subject see List of basic Australia topics. Pro forma bills are incomplete pieces of legislation and undergo only the first reading stage, in order to symbolize the authority of the Houses of Parliament to discuss matters other than those specified in the reasons for Parliament having been summoned. Reading is a mechanism by which a bill is introduced to and approved by a Legislature. TalkParliament#Screen-size. -->A parliament is a Legislature, especially in those TalkParliament#Screen-size. -->A parliament is a Legislature, especially in those After first reading, the bill is never considered further. Reading is a mechanism by which a bill is introduced to and approved by a Legislature. In Canada, such bills are titled Bill C-1, An Act respecting the Administration of Oaths of Office in the Commons and Bill S-1, An Act relating to Railways in the Senate; in the UK, the equivalents are the Outlawries Bill in the Commons and the Select Vestries Bill in the Lords. Bills C-1 and S-1, are ''pro forma'' bills introduced in the House of Commons and Senate at the opening of each session of the Parliament of Canada The House of Commons (Chambre des communes is a component of the Parliament of Canada, along with the Sovereign (represented by the Governor General) and Bills C-1 and S-1, are ''pro forma'' bills introduced in the House of Commons and Senate at the opening of each session of the Parliament of Canada The Senate of Canada (Le Sénat du Canada is a component of the Parliament of Canada, along with the sovereign (represented by the governor general The Outlawries Bill (or by its Long title, A Bill for the more effectual preventing clandestine Outlawries) is customarily introduced in the United Kingdom The House of Commons' is the Lower house of the Parliament of the United Kingdom, which also comprises the Sovereign and the House of Lords The Select Vestries Bill (or by its Long title, A bill for the better regulating of Select Vestries) is customarily introduced in the House of Lords at The House of Lords is the second house of the Parliament of the United Kingdom and is also commonly referred to as "the Lords" In Australia, and the Australian States, the pro forma bills consist only of a short title, and do not proceed beyond the first reading stage.
In the United States a "pro forma" session of the Senate can be held, in which no formal business is conducted. The United States of America —commonly referred to as the A senate is a Deliberative body, often the Upper house or chamber of a Legislature or Parliament. This is usually to fulfill the "constitutional obligation that neither chamber can adjourn for more than three days without the consent of the other. "[1] A pro forma session can also be used during Senate recesses to block recess appointments by the Executive Branch. A recess appointment occurs when the President of the United States fills a vacant federal position during a recess of the United States Senate. In Political science and Constitutional law, the executive is the branch of government responsible for the day-to-day management of the State.
References
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