In the percent-of-sales forecasting method, all of the following balance sheet and income statement items are assumed to increase proportionately with sales EXCEPT:
A)dividends
B)accounts payable
C)long-term debt
D)neither dividends nor long-term debt increase

Question

Quizplus · Accepted Answer

In the percent-of-sales forecasting method, it is assumed that many balance sheet and income statement items increase proportionally with sales. These include inventory, accounts receivable, cost of goods sold, and operating expenses. However, dividends and long-term debt are not expected to increase proportionally with sales, so the correct answer is D.

In the Percent-Of-Sales Forecasting Method, All of the Following Balance