A Benefit of Using Projected Balance Sheets and Income Statements

question 20

Multiple Choice

A benefit of using projected balance sheets and income statements is that

• A) an organization can compute projected financial ratios under various scenarios.
• B) money can be put aside to pay future income taxes.
• C) insurance needs can be computed.
• D) it is useful in analyzing past performance.
• E) All of the above

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Definitions:

Perpetual

A method of inventory accounting where inventory levels and cost of goods sold are updated in real-time with each sale or purchase transaction.

Perpetual Inventory System

An inventory management method where updates to the inventory account occur continuously as transactions happen.

Weighted-Average Method

An inventory costing method that averages the cost of all similar goods available during the period.

Periodic Inventory

An inventory system where the inventory count and cost of goods sold calculations are conducted at specific intervals.