If the Adoption of a New Product Will Reduce the Sales

question 61

Multiple Choice

If the adoption of a new product will reduce the sales of an existing product, then the projected sales on the pro forma statement should:

• A) reflect only the sales of the new product.
• B) include only the reduction amount.
• C) equal the incremental increase in total sales.
• D)be adjusted upward by the reduction amount.

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Definitions:

General Partner

An owner of a partnership who has unlimited personal liability for the debts and obligations of the business and can participate in its management.

Certificate of Limited Partnership

A legal document filed with a governmental body to form a limited partnership.

Oral Agreement

A contract that has been agreed to by speaking rather than in writing. Although legally binding, they are often harder to prove in court.

Winding Down

The process of gradually reducing operations or activities in a business, often in preparation for its closure.