Utilizing Past Cost and Expense Ratios (Percent-Of-Sales Method) When Preparing

question 10

Multiple Choice

Utilizing past cost and expense ratios (percent-of-sales method) when preparing pro forma financial statements will tend to ________.

• A) understate profits when sales are decreasing
• B) understate profits when sales are increasing
• C) overstate profits when sales are increasing
• D) neither understate nor overstate profits

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EVLN Model

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Strategy

A plan of action or policy designed to achieve a major or overall aim.