Question

The percent-of-sales method assumes that all accounts on the balance sheet change in some fixed proportion...

The percent-of-sales method assumes that all accounts on the balance sheet change in some fixed proportion to changes in sales.

TRUE or FALSE

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

ANSWER

TRUE

EXPLANATION : The "percent of sales" method is basically a financial forecasting technique whose crux is that Balance Sheet and Income Statement Accounts changes in some proportion to changes in sales.

So by calculating that "fixed proportion" we are able to make proforma financial statements and budgets by multiplying that "fixed ratio" with the estimated sales of future years.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The following is a listing of some of the balance sheet accounts and all of the...
The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Northview Company as they appear on the company’s adjusted trial balance. Accounts Payable $ 11,000 Accounts Receivable 21,000 Inventory 22,000 Advertising Expense 17,000 Cost of Goods Sold 129,000 Delivery Expense 7,000 Income Tax Expense 3,900 Insurance Expense 1,000 Rent Expense 16,000 Sales Revenue 260,000 Sales Discounts 10,000 Sales Returns & Allowances 34,000 Income from Operations would be:
The following is a listing of some of the balance sheet accounts and all of the...
The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Aldine Inc. as they appear on the company’s adjusted trial balance.   Accounts Payable $ 18,000   Accounts Receivable   30,000   Inventory   23,800   Advertising Expense   21,500   Cost of Goods Sold   165,000   Delivery Expense   7,900   Income Tax Expense   3,700   Insurance Expense   1,000   Rent Expense   19,600   Sales Revenue   350,000   Sales Discounts   9,100   Sales Returns and Allowances   47,500 Net income would be Income from Operations would...
Some accountants believe that the percent of revenue method for estimating uncollectible accounts expense is superior...
Some accountants believe that the percent of revenue method for estimating uncollectible accounts expense is superior to the percent of receivables method because it is more conservative. True or False The best estimate of the amount of cash a company expects to collect from its accounts receivable is the face value of the receivables. True or False
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance...
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $835,000; Allowance for Doubtful Accounts has a credit balance of $7,500; and sales for the year total $3,760,000. Bad debt expense is estimated at 1/2 of 1% of sales. a. Determine the amount of the adjusting entry for uncollectible accounts. $ b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Adjusted Balance Debit (Credit) Accounts Receivable...
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance...
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $605,000; Allowance for Doubtful Accounts has a debit balance of $5,500; and sales for the year total $2,720,000. Bad debt expense is estimated at 1/4 of 1% of sales. a. Determine the amount of the adjusting entry for uncollectible accounts. $ b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable $ Allowance for Doubtful...
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance...
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $715,000; Allowance for Doubtful Accounts has a credit balance of $6,500; and sales for the year total $3,220,000. Bad debt expense is estimated at 1/4 of 1% of sales. a. Determine the amount of the adjusting entry for uncollectible accounts. $ b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable $ Allowance for Doubtful...
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance...
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a credit balance of $6,500; and sales for the year total $3,380,000. Bad debt expense is estimated at 1.1% of sales. 1. Determine the amount of the adjusting entry for uncollectible accounts. $ 2. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable $ Allowance for Doubtful Accounts $...
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance...
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $595,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,680,000. Bad debt expense is estimated at 1/4 of 1% of sales. 1. Determine the amount of the adjusting entry for uncollectible accounts. $ 2. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable $ Allowance for Doubtful...
Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts...
Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts receivable is $390,000, of which $240,000 pertain to sales that were made during June. Budgeted sales for July are $1,240,000. Ross collects 75% of sales in the month of sale; 10% in the following month; and the final 15% in the second month after the sale. Part 1: What are Ross's budgeted collections for July? Part 2: What is the budgeted balance of Ross's...
Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts...
Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts receivable is $400,000, of which $240,000 pertain to sales that were made during June. Budgeted sales for July are $1,250,000. Ross collects 70% of sales in the month of sale; 20% in the following month; and the final 10% in the second month after the sale. What are Ross's budgeted collections for July?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT