A Firm Has Net Income of $32,000 on Sales of $190,000.Sales

question 103

Multiple Choice

A firm has net income of $32,000 on sales of $190,000.Sales are expected to increase by 6 percent next year and the dividend payout ratio is 35 percent.The firm uses the percentage of sales approach when compiling pro forma statements.What amount is expected to be added to retained earnings next year?

• A) $14,300
• B) $15,400
• C) $15,686
• D) $17,550
• E) $22,048

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Definitions:

False Cause

A logical fallacy where a cause-and-effect relationship is wrongly assumed between two events because they happen sequentially.

Deterministic

A system or process characterized by a predetermined sequence of events or outcomes, without any random variation.

Correlational

Correlational refers to a statistical relationship between two variables, indicating how one may predict or be associated with changes in another.

Random

Lacking any definite plan or order or purpose; governed by or depending on chance.