Which of the Following Is Untrue of the Percent-Of-Sales Method

question 82

Multiple Choice

Which of the following is untrue of the percent-of-sales method?

• A) It is much easier than tracing through various cash flows to arrive at the pro forma statements.
• B) It is a broad-brush approach when compared to developing pro forma statements.
• C) The output is less meaningful because it doesn't give the month-to-month breakdown of data when compared to pro forma statements.
• D) Changes in sales levels is not an important aspect of this method.

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Definitions:

Statute of Frauds

A legal principle that requires certain contracts to be in writing and signed by all parties involved to be enforceable.

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise that the other party has reasonably relied on to their detriment.

Restitution

A remedy in law requiring a party to restore the victim to the position they were in before the wrongful act.

Parol Evidence Rule

A legal principle that prevents the introduction of verbal statements that are outside the written contract, intended to clarify or contradict the document's terms.