The Percentage of Sales Method: Formula & Example

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Which of the following balance sheet accounts is NOT impacted by an increase in sales?

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1. Calculate the forecast sales given the following information: current sales = $500; growth rate = 10%; cost of goods sold = $300; net income = $200.

2. If a company decides to issue shares in order to raise $2,000, which of the following accounts would increase in the pro-forma balance sheet?

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About This Quiz & Worksheet

The percentage of sales method is used for a specific purpose, and you can gauge your knowledge of this reason and its formula by working through the quiz and worksheet.

Quiz & Worksheet Goals

You will be assessed on your understanding of:

  • The meaning of retained earnings
  • An account that would increase in the pro-forma balance sheet
  • Calculating the amount of external financing
  • Accounts that are impacted by an increase in sales
  • How to calculate the forecast sales

Skills Practiced

  • Information recall - access the knowledge you have gained about balance sheet accounts impacted by an increase in sales
  • Interpreting information - verify that you can read information about an account that increases in the pro-forma balance sheet and interpret it correctly
  • Reading comprehension - ensure that you draw the most important information from the lesson on the percentage of sales approach

Additional Learning

Keep learning by making your way through the lesson titled The Percentage of Sales Method: Formula & Example. Using this lesson, you can:

  • Define the percentage of sales method
  • Determine what balance sheets show
  • Identify the formula used to calculate the sales forecast
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