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

question 221

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 points out a flaw in Kershner's reasoning?

• A)Kershner is not accounting for all of the possible sources of revenue for the company.
• B)Kershner is not including owners' equity as part of sales revenue.
• C)Income statements are not as important as balance sheets in determining a company's fiscal health.
• D)Many employees are not happy with the direction the company is headed.
• E)Kershner is not accounting for the contribution that expenses will make to the income statement.

Compare and contrast the economic condition, policies, and outcomes of different administrations.

Understand the evolution of American economy from the 20th century to present, highlighting technological progress and trade changes.

Acknowledge the socio-economic changes including suburbanization, agricultural trends, and the relationship between mass production and consumption.

Understand the concept and purpose of depreciation in accounting.

---

Definitions:

Average-Total-Cost Curve

A graphical representation showing how the average total cost of production changes as the quantity of output is altered.

GPA

Grade Point Average, a measure of a student's academic achievement at a college or university, calculated as a numerical average of grades.

Short Run

A period in which at least one factor of production is fixed, limiting the ability of the economy or firm to adjust to changes.

Long Run

A period of time in which all factors of production and costs are variable, allowing for full adjustment to change.