The Strict Application of the Percent-Of-Sales Method of Preparing the Pro

question 169

Multiple Choice

The strict application of the percent-of-sales method of preparing the pro forma income statement assumes all costs are

• A) fixed.
• B) constant.
• C) independent.
• D) variable.

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Definitions:

Common Stock

Shares of ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Cash Dividends

Payments made by a corporation to its shareholders, usually in the form of cash from its profits.

Net Income

The total earnings of a company after deducting all expenses, taxes, and losses from total revenue, indicative of the company's profitability.

Cash Dividend

Cash rewards issued to investors of a certain class by a firm, as determined by the firm's board based on the company's profits.