The Projected Balance Sheet Forecasting Method Produces Accurate Results Unless

question 38

Multiple Choice

The projected balance sheet forecasting method produces accurate results unless which of the following condition(s) is (are) present?

• A) Fixed assets are "lumpy."
• B) Strong economies of scale are present.
• C) Excess capacity exists because of a temporary recession.
• D) Answers a,b,and c all make the projected balance sheet method inaccurate.
• E) Answers a and c make the projected balance sheet method inaccurate,but,as the text explains,the assumption of increasing economies of scale is built into the projected balance sheet method.

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Definitions:

Credit Sale

involves selling goods or services to a customer with payment to be received at a later date.

Indirect Cost

Expenses that are not directly attributable to a specific product, service, or project, such as utilities or rent for office space.

Building's Custodian

A person responsible for the maintenance and upkeep of a building.