A Percentage of Sales Model Projects Sales to Increase by 5

question 74

Multiple Choice

A percentage of sales model projects sales to increase by 5% annually over the next 4 years.If costs are forecast at a constant 80% of sales,and this year's income is $1,250,the forecast income in the fourth year will be:

• A) $1,447.03.
• B) $1,826.15.
• C) $1,595.35.
• D) $1,519.38.

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Definitions:

Average Account Receivables

The average amount of money owed to a company by its customers for goods or services delivered on credit.

Allowance Method

An accounting technique that estimates uncollectible accounts receivable as an expense, reducing the accounts receivable balance.

Outstanding Accounts Receivable

The amount of money owed to a company by its customers for goods or services delivered but not yet paid for.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that is expected to become uncollectible.