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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Definitions:

Adoptive Parents

Individuals or couples who become the legal guardians of a child through the process of adoption, assuming all parental responsibilities and rights.

Heterosexual Couples

Romantic or sexual partnerships formed between people of opposite sex.

Supportive

Providing encouragement, assistance, or emotional help to others.

Destructive

pertains to causing significant harm or damage, often irreversibly, to objects, structures, relationships, or well-being.