In a Period of Rising Sales Utilizing Past Cost and Expense

question 147

Multiple Choice

In a period of rising sales utilizing past cost and expense ratios (percent-of-sales method) , when preparing pro forma financial statements and planning financing, will tend to ________.

• A) understate retained earnings and understate the additional financing needed
• B) overstate retained earnings and overstate the additional financing needed
• C) understate retained earnings and overstate the financing needed
• D) overstate retained earnings and understate the financing needed

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Definitions:

Cultural Forces

The various elements within a society that influence and shape its cultural beliefs, values, norms, and practices, including religion, media, laws, and traditions.

Stream of Consciousness

A literary technique or narrative mode that attempts to capture the flow of thoughts and feelings running through the mind.

William James

An American philosopher and psychologist, often referred to as the father of American psychology, known for his works on pragmatism and the psychology of religious experience.

Cognitive Perspective

A psychological approach that focuses on how people perceive, think about, and understand their world and the mental processes that underlie behavior.