Which of the Following Statements About the Percentage-Of-Sales Method of Financial

question 77

Multiple Choice

Which of the following statements about the percentage-of-sales method of financial forecasting is true?

• A)It is the least commonly used method of financial forecasting.
• B)It is a much more precise method of financial forecasting than a cash budget would be.
• C)It involves estimating the level of an expense, asset or liability for a future period as a percent of the forecast for sales revenues.
• D)It projects all liabilities as a fixed percentage of sales.

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Definitions:

Warehouse Inventory

Encompasses the goods and materials held in a storage space awaiting further distribution or sale, essential for managing supply chain efficiency.

Pipeline Inventory

Inventory that is currently in transit between locations or stages in a supply chain. It represents goods that are not yet available for sale or use.

Periodic Review System

A system of inventory control where the inventory levels are reviewed at fixed intervals to determine the reorder quantity.

Order Up To Level

A replenishment strategy where inventory is restocked to a predetermined level each time an order is placed to maintain stock availability.