The Weakness of the Judgmental Approach to Preparing a Pro

question 12

Multiple Choice

The weakness of the judgmental approach to preparing a pro forma balance sheet is ________.

• A) the assumption that the values of certain accounts can be forced to take on desired levels
• B) the assumption that the firm faces linear total revenue and total operating cost functions
• C) the assumption that the firm's past financial condition is an accurate predictor of its future
• D) ease of calculation and preparation

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Definitions:

Group of People

A collection of individuals who are together either by choice or accidentally, sharing or engaging in common activities or goals.

Negative Attitude

A pattern of thinking where individuals expect the worst and see the downside in situations.

Social Perception

The process through which we form impressions of and make inferences about other people and social situations.

Inferences

The process of drawing logical conclusions from available evidence and reasoning.