The Strict Application of the Percent-Of-Sales Method to Prepare a Pro

question 155

Multiple Choice

The strict application of the percent-of-sales method to prepare a pro forma income statement assumes the firm has no fixed costs. Therefore, the use of the past cost and expense ratios generally tends to ________ profits when sales are increasing.

• A) accurately predict
• B) overstate
• C) understate
• D) have no effect on

---

Definitions:

Executive Order 11246

A U.S. Presidential mandate that requires government contractors to practice affirmative action and prohibit discrimination on the basis of race, color, religion, sex, or national origin.

Bona Fide Occupational Qualification

A legal term that allows employers to make hiring decisions based on specific attributes when those attributes are essential to the job.

Disparate Treatment

A form of discrimination where individuals are treated differently based on protected characteristics, such as race, gender, age, or religion, in employment and other settings.

Disparate Impact

A concept in employment law where policies or practices have a disproportionately adverse effect on a protected group, even if unintentional.