Child care operating budgets generally contain a pro forma income statement. To prepare this statement, you must first prepare budgets for _______ and _______.

A. estimated income; actual income
B. estimated expenditures; actual expenditures
C. revenues; expenses
D. income; reserves

C.

Right!

To prepare a pro forma income statement for a child care operating budget, you must first prepare budgets for revenues (estimated income) and expenses (estimated expenditures).

Explanation:

A pro forma income statement is a financial statement that projects the expected revenues and expenses for a specific period. It helps in predicting the profitability of a child care center and is an essential component of budgeting and financial planning.

To create a pro forma income statement, you need to estimate the income or revenues that the child care center expects to generate. This includes sources such as tuition fees, government subsidies, donations, or any other form of income the center may receive.

In addition, you also need to prepare a budget for estimated expenditures. This involves estimating and listing out all the expenses the child care center is likely to incur during the period, such as salaries and wages, rent or mortgage payments, utilities, supplies, food, licensing fees, and other operational costs.

Once you have prepared the budgets for estimated income (revenues) and estimated expenditures, you can use this information to create the pro forma income statement, which will show the projected revenues, expenses, and ultimately the net income or loss for the child care center.