Question

Which of the following statements is incorrect?

a) The percent of sales tool of Excel is in the Analysis ToolPak add-in.
b) All the answers are correct except one.
c) With the discretionary sources of financing, the firm's upper-level management uses its discretion to determine the appropriate type of financing to use.
d) Based on of the percent of sales method, if the cost of goods sold has averaged 65% of sales over the past several. years, we would assume that this relationship would hold for the next year.
e) Discretionary financing needed (DFN) is the amount of financing that the firm thinks it will need to raise in the next year to be able to balance the pro forma balance sheet used in the forecasting.

Answer 1

The incorrect statement is option c) With the discretionary sources of financing, the firm's upper-level management uses its discretion to determine the appropriate type of financing to use.

Step-by-step explanation:

The incorrect statement is option c) With the discretionary sources of financing, the firm's upper-level management uses its discretion to determine the appropriate type of financing to use.

This statement is incorrect because discretionary sources of financing do not give the firm's management the discretion to determine the appropriate type of financing to use. Discretionary sources of financing refer to sources that are not strictly necessary or required for the firm's operations, such as raising funds for expansion or new projects.

Examples of discretionary sources of financing include selling stock or borrowing through banks or bonds. These decisions are usually made by the firm's owners or board of directors, rather than the upper-level management.