Which of the Following Are Constant Under the Percentage of Sales

question 131

Multiple Choice

Which of the following are constant under the percentage of sales approach?

• A) Profit margin and dividend payout ratio.
• B) Addition to retained earnings and net income.
• C) Dividends paid and the profit margin.
• D) Costs as a percentage of sales and dividends paid.
• E) Costs as a percentage of sales and the addition to retained earnings.

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Definitions:

Budgeted Sales

The projected amount of sales, in units or dollars, that a company expects to achieve during a specific period.

Credit Sales

Sales in which the customer is allowed to pay for the goods or services at a later date, rather than at the time of purchase.

Raw Materials Purchases

The total cost of all components bought for use in the production process of goods.

Cash Disbursements

Outgoing payments made by a business, often documented in a cash disbursement journal, including expenses, creditor payments, and other financial outflows.