A weakness of the percent-of-sales method to preparing a pro forma income statement is
A) the assumption that the firm faces linear total revenue and total operating cost functions.
B) ease of calculation and preparation.
C) the assumption that the firm's past financial condition is an accurate predictor of its future.
D) the assumption that the values of certain accounts can be forced to take on desired levels.

Question

Quizplus · Accepted Answer

The percent-of-sales method assumes that past financial conditions and relationships will continue into the future, which may not always be accurate.

A Weakness of the Percent-Of-Sales Method to Preparing a Pro