Security Analyst Obtained the Following Information from Prestopino Products' Financial

question 17

Multiple Choice

security analyst obtained the following information from Prestopino Products' financial statements: • Retained earnings at the end of 2009 were $700,000, but retained earnings at the end of 2010 had declined to $320,000.
• The company does not pay dividends.
• The company's depreciation expense is its only non-cash expense; it has no amortization charges.
• The company has no non-cash revenues.
• The company's net cash flow (NCF) On the basis of this information, which of the following statements is CORRECT?

• A)Prestopino had negative net income in 2010.
• B)Prestopino's depreciation expense in 2010 was less than $150,000.
• C)Prestopino had positive net income in 2010, but its income was less than its 2009 income.
• D)Prestopino's NCF in 2010 must be higher than its NCF in 2009.
• E)Prestopino's cash on the balance sheet at the end of 2010 must be lower than the cash it had on the balance sheet at the end of 2009.

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Definitions:

Quality Cost Report

A financial statement detailing the costs associated with preventing, detecting, and addressing product or service defects.

Internal Failure Cost

Costs incurred when a product or service fails to meet quality standards before it is delivered to the customer, including scrap and rework costs.

Quality Cost Report

A financial statement detailing the costs associated with preventing, detecting, and correcting defective work, categorized into prevention, appraisal, and failure costs.

Prevention Costs

Expenses incurred to prevent defects in products or inefficiencies in services.