Which One of the Following Is Correct in Relation to Pro

question 9

Multiple Choice

Which one of the following is correct in relation to pro forma statements?

• A)Fixed assets must increase if sales are projected to increase.
• B)Net working capital is affected only when a firm's sales are expected to exceed the firm's current production capacity.
• C)The addition to retained earnings is equal to net income plus dividends paid.
• D)Long-term debt varies directly with sales when a firm is currently operating at maximum capacity.
• E)Inventory changes are directly proportional to sales changes.

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