Which of the following is a common method for forecasting nonoperating assets?
A) Use prior-year common-sized balance sheet ratio
B) Apply forecasted sales growth rate to historic balance
C) Assume no change in the account balance
D) Plug the amount based on other balance sheet accounts
E) None of the above

Question

Quizplus · Accepted Answer

Nonoperating assets often have unpredictable cash flows and may not be directly tied to the operations of the business. As such, a common method for forecasting these assets is to assume no change in the account balance, especially if there is no clear trend or rationale to suggest an increase or decrease.

Which of the Following Is a Common Method for Forecasting