CPA PEP Finance Elective Practice Questions - CPA Professional Education Program (PEP) - Finance Elective Exam

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A company forecasts sales growth of 20% using the percent-of-sales method. Sales rise from $1,000,000 to $1,200,000. Spontaneous assets are 60% of sales and spontaneous liabilities are 15% of sales. What is the additional funds needed (AFN) before considering retained earnings?

$$45,000 $$135,000 $$90,000 $$120,000

Correct Answer:

$$90,000

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