A Weakness of the Percent-Of-Sales Method of Preparing a Pro

Multiple Choice

A weakness of the percent-of-sales method of preparing a pro forma income statement is ________.

A) that it forecasts income and then expresses the various income statement items as percentages of projected income.
B) the assumption that the firm faces linear total revenue and total operating cost functions
C) the assumption that the firm's past financial condition is an accurate predictor of its future
D) the difficulty faced in calculation and preparation of such statements