Based on ISBN 978-1-285-19090-7===Financial Reporting, Financial Statement Analysis and Valuation, 8th Edition

Relying on Accounting to Avoid Forecast Errors

Chapter 10 of the textbook states that forecasts of nancial statements should rely on the additivity within nancial statements and the articulation across nancial statements to avoid internal inconsistencies in forecasts. Explain how the concepts of additivity and articulation apply to nancial statement forecasts. Also explain how these concepts can help you avoid potential forecast errors.