Which of the following statements about the percent-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.

Question

Quizplus · Accepted Answer

The percent-of-sales method of financial forecasting involves estimating the level of an expense, asset, or liability for a future period as a percent of the forecast for sales revenues. It is not the least commonly used method and it is not necessarily more precise than a cash budget. It does not project all liabilities as a fixed percentage of sales.

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