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

question 164

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,if true,would strengthen Kershner's argument?

• A)The total operating expenses were high in the current year.
• B)The company's rent went up 30 percent from the previous year.
• C)The cost of goods sold was low compared to gross sales.
• D)The company is a small one compared to its competitors.
• E)The company has a solid core of fixed assets.

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Definitions:

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An index measuring the change in the price level of a basket of consumer goods and services purchased by households.

Scatterplot

A type of graph in which the values of two variables are plotted along two axes, the pattern of the points revealing any correlations.

Log

The logarithm function, which is the inverse operation of exponentiation, used in many fields to transform data for analysis or to solve exponential equations.