Author Question: In a period of rising sales utilizing past cost and expense ratios (percent-of-sales method), when ... (Read 34 times)

kamilo84 · **on:** Jul 10, 2018

In a period of rising sales utilizing past cost and expense ratios (percent-of-sales method), when preparing pro forma financial statements and planning financing, will tend to ________.

A) understate retained earnings and understate the additional financing needed
B) overstate retained earnings and overstate the additional financing needed
C) understate retained earnings and overstate the financing needed
D) overstate retained earnings and understate the financing needed

Question 2

A bond rating of BB indicates that the company's financial position is above average and hence
the default risk on the bonds is very low.

Indicate whether the statement is true or false