The projected balance sheet method of forecasting is based on which of the following assumptions?
A) All balance sheet accounts are tied directly to sales.
B) Most balance sheet accounts are tied directly to sales.
C) The current level of total assets is optimal for the current sales level.
D) Answers a and c above.
E) Answers b and c above.

Question

Quizplus · Accepted Answer

The projected balance sheet method assumes that the current level of total assets is optimal for the current sales level (option C) and that most balance sheet accounts are tied directly to sales (option B). Therefore, answer E, which includes both options B and C, is the best choice. Option A is incorrect because not all balance sheet accounts may be tied directly to sales. Option D is incorrect because option A is incorrect.

The Projected Balance Sheet Method of Forecasting Is Based on Which