A Weakness of the Percent-Of-Sales Method to Preparing a Pro

question 13

Multiple Choice

A weakness of the percent-of-sales method to preparing a pro forma income statement is

• A) the assumption that the firm faces linear total revenue and total operating cost functions.
• B) ease of calculation and preparation.
• C) the assumption that the firm's past financial condition is an accurate predictor of its future.
• D) the assumption that the values of certain accounts can be forced to take on desired levels.

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Terms or phrases that lack specificity and clarity, often leading to ambiguity or misunderstanding.

Homecoming Party

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