When Utilizing the Percentage of Sales Approach, Managers

question 75

Multiple Choice

When utilizing the percentage of sales approach, managers:

• A) estimate company sales based on a desired level of net income and the current profit margin.
• B) consider only those assets that vary directly with sales.
• C) consider the current production capacity level.
• D) can project net income but not net cash flows.
• E) assume all liability accounts will remain constant.

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Definitions:

Cash Short

Cash Short refers to a situation where the actual amount of cash on hand is less than the recorded amount in the accounting records, indicating a discrepancy that needs investigation.

Cash Overages

A situation where the amount of cash in a cash register exceeds the amount expected based on sales records and receipts.

Separating Operations

The process of dividing a company's activities into distinct tasks or functions for efficiency or strategic purposes.

Custody of Assets

The responsibility of safeguarding a company's physical and digital assets to prevent loss, theft, or unauthorized access.