In using the percentage of sales forecasting method, the assumption is that ______________.
A) there is a direct relationship between long-term debt and sales
B) inventories will increase proportionately with sales
C) there is a direct relationship between notes payable and sales
D) accounts payable will not increase proportionally with sales

Question

Quizplus · Accepted Answer

The percentage of sales forecasting method assumes that certain balance sheet and income statement items, such as inventories, will increase in direct proportion to sales. This method is based on the premise that a company's operational aspects, like inventory levels, are tied to its sales performance.

In Using the Percentage of Sales Forecasting Method, the Assumption