Under Which of the Following Conditions Would the Percent-Of-Sales Method

question 56

Multiple Choice

Under which of the following conditions would the percent-of-sales method of financial forecasting be most accurate?

• A)If assets must be purchased in discrete quantities
• B)When asset requirements can be accurately forecasted as a constant percent of sales
• C)If economic circumstances beyond a firm's control drastically change from one year to the next
• D)When economies of scale can be realized from investing in specific assets

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Definitions:

Piaget

Refers to Jean Piaget, a Swiss psychologist known for his pioneering work in child development and his theory of cognitive development.

Formal Operational

The stage of cognitive development, according to Jean Piaget, in which individuals become capable of abstract thinking and hypothetical reasoning.

Preoperational

The stage in Piaget's theory of cognitive development where children from about 2 to 7 years old exhibit egocentric thinking and struggle with understanding the viewpoint of others.

Negative Outcomes

refers to the undesirable or harmful results of actions or conditions, often contrasted with positive results or benefits.