You Constructed a Pro Forma Balance Sheet for Next Year

question 22

Multiple Choice

You constructed a pro forma balance sheet for next year and found that external financing required was negative (i.e. ,the company projected a financing surplus) .Which of the following options,all else equal,would NOT correct the projected imbalance?

• A) A stock repurchase
• B) A decrease in accounts payable
• C) An increase in cash and marketable securities
• D) An increase in the retention ratio

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Definitions:

Sales

The activities involved in selling goods or services to customers for money.

Administrative Expenses

Expenses related to the general operations of a business, such as salaries of executive personnel, accounting, and human resources.

Overapplied Overhead

The situation where the allocated manufacturing overhead cost is more than the actual overhead incurred.

Cost Ledger

A ledger that keeps detailed records of the costs associated with production or acquiring inventory.