The percent-of-sales method of forecasting makes which of the following assumptions?
A)That some assets do not increase in direct proportion to an increase in sales.
B)The accounts receivable average collection period will remain constant throughout the forecast period.
C)The firm may acquire some "lumpy" assets.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

The percent-of-sales method assumes that certain financial statement items, like accounts receivable, will vary directly with sales, implying that the average collection period remains constant.

The Percent-Of-Sales Method of Forecasting Makes Which of the Following