A weakness of the percent-of-sales method of preparing a pro forma income statement is ________.
A) that it forecasts income and then expresses the various income statement items as percentages of projected income.
B) the assumption that the firm faces linear total revenue and total operating cost functions
C) the assumption that the firm's past financial condition is an accurate predictor of its future
D) the difficulty faced in calculation and preparation of such statements

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 of Preparing a Pro