What best describes a forecast transaction?

A forecast transaction is best described as an anticipated future transaction without a binding agreement. This concept refers to situations where a company expects to conduct a transaction in the future but has not yet entered into any formal commitment or agreement. It encompasses projections of future economic events such as sales, purchases, or hedging activities based on expected market conditions or business operations.

This understanding is crucial for assessing financial risks and opportunities, as businesses often rely on forecasts to inform their strategic planning and budgeting processes. It highlights the inherently uncertain nature of future transactions, which is different from confirmed agreements or specific commitments to perform a transaction.