Kershner Says: "Our Income Statement Should Be Looking Good This

question 197

Multiple Choice

Kershner says: "Our income statement should be looking good this year.We've been doing excellent business this year,so we have a lot of gross sales.The company should be in good shape." Michaels replies: "It remains to be seen how our income statement will look overall.Despite strong sales revenue,the overall income statement might not be as good as we might hope."
Which of the following does Michaels assume?

• A)Revenues this year were not as high as last year's.
• B)Revenues are not as high as Kershner thinks they are.
• C)Selling expenses exceeded administrative expenses this year.
• D)Other factors must be considered to arrive at an income statement.
• E)Income taxes will be high this year.

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Definitions:

Short-Term Bank Loans

Loans provided by banks that are typically due for repayment within a year or less.

Banks

Financial institutions licensed to receive deposits, offer loans, and provide various other financial services.

Repay

To pay back or return money that was borrowed from a person, bank, or financial institution.

Risk

The potential for loss or the chance that an investment's actual return will differ from the expected return.