1) The \"percent of sales method\" is a method of preparing pro forma financial
ID: 2665454 • Letter: 1
Question
1) The "percent of sales method" is a method of preparing pro forma financial statements. Which of the following would be an example of how the "percent of sales method" is developed?a. Forecast expenses by applying a percent of projected sales, using last year's expenses as a percent of last year's sales.
b. Forecast assets by applying a percent of projected sales, using current year's assets as a percent of current year's sales.
c. Approximate liabilities by applying a percent of projected sales, using the last five-year average of liabilities as a percent of sales.
d. All of the above.
e. None of the above.
2) What is a "CD"?
a. a negotiable certificate of deposit
b. a corporate controlled disbursement account
c. a commercial demand deposit
d. a certified disbursement
3) Which of the following is a spontaneous source of financing?
I accounts payable
II. wages and salaries payable
III. accrued interest
IV. Inventories
a. I only
b. I and II
c. I and IV
d. I, II, and III
e. all of above
4) Managing a firm's cash outflows through use of a "zero balance account" system offers all but which of the following benefits?
a. Centralized control over disbursements.
b. Reduction of management time spent on superficial cash management activities.
c. Higher rate of return on invested funds.
d. Reduction of excess balances in outlying accounts.
Explanation / Answer
1) None of the above Percent of sales method is a method of estimating cash requirements by expressing revenues and expenses as percentage of sales and using these percentages to construct proforma statement. Correct option is e) None of the above 2) CD is a negotiable Certificate of deposit. Correct option is a) 3) All I,II and III are spontaneous sources of financing. Correct option is d) 4) They permit centralized control over disbursements. Correct option is a)Related Questions
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