Fixed Assets Are Often Estimated Incorrectly by the Percent of Sales

question 113

Multiple Choice

Fixed assets are often estimated incorrectly by the percent of sales method because

• A) fixed assets remain constant and the percent of sales method assumes all assets increase proportionally with sales.
• B) fixed asset are very expensive.
• C) fixed assets are typically purchased in "lumps" and therefore do not increase proportionally with sales.
• D) fixed assets are part of the capital budgeting process.

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