When Creating the Pro Forma Income Statement,the Owner Needs to Translate

question 19

Multiple Choice

When creating the pro forma income statement,the owner needs to translate the target profit into a net sales figure.To do this,the owner needs:

• A)to operate the business for one to two years to build a record.
• B)published statistics for his/her specific type of business.
• C)to divide actual net sales by the net profit projected.
• D)a sales forecast,the amount of retained earnings,and current depreciation on assets.

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Definitions:

Supply

The total amount of a good or service that producers are willing and able to sell at a given price over a certain period.

Consumer Surplus

The rift between what consumers are economically prepared to spend on a service or product and their actual spending.

Consumer Surplus

The divergence between the total consumers can and are willing to pay for a product or service and what they truly pay.

Binding Price Floor

A government-imposed minimum price set above the equilibrium price, resulting in a surplus by preventing the market price from falling to its natural level.