The percent-of-sales method would not result in very accurate financials if used for a tourism company.

Question

Quizplus · Accepted Answer

The percent-of-sales method assumes that certain expenses remain constant as a percentage of the company's overall revenue. However, in the case of a tourism company, expenses can fluctuate greatly based on the seasonality of the industry, changes in marketing and advertising costs, and other factors. Therefore, using the percent-of-sales method may not accurately reflect the true financial situation of a tourism company.

The Percent-Of-Sales Method Would Not Result in Very Accurate Financials