In preparing projected statements, to project cost of goods sold in the income statement, which of these methods is recommended?
A) Net Worth Method
B) Net Income Method
C) Percentage-of-Sales Method
D) Price-Earnings Ratio method
E) Outstanding Shares Method

Question

Quizplus · Accepted Answer

The Percentage-of-Sales Method is commonly used to project cost of goods sold because it assumes that costs vary directly with sales, making it a practical approach for forecasting.

In Preparing Projected Statements, to Project Cost of Goods Sold