Which of the following statements concerning budget preparation for a merchandiser is correct?

A.

Operating expenses differ from operating cash outflows solely as a result of timing differences between when an expense is incurred and when an expense is paid.

B.

If a company requires its ending inventory to equal a certain percentage of the cost of next month's sales, the company would be able to prepare purchases budgets for 4 months as long as it knew the cost of sales for all 4 months.

C.

Assuming only a portion of a company's sales are made on account, bad debt expense under the percentage of sales method is calculated by multiplying total sales by the estimated uncollectible percentage.

D.

An understanding of both cost function and cost behavior is required to prepare an operating expense budget.

E.

None of the above statements is correct.