The \"percent of sales method\" is a method of preparing pro forma financial sta

Question

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.

Explanation / Answer

1) None of the above is the correct option. 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 income statement. Correct option is e) 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 income statement. Correct option is e) None of the above

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.