One Manager (Adam)says That the Income Statement Should Be Strong

question 177

Multiple Choice

One manager (Adam) says that the income statement should be strong this year because the company has achieved a high level of sales revenue.Another manager (Eve) says that even with strong sales revenue,the income statement might not look particularly good.What is the flaw in Adam's reasoning?

• A) He is not taking into accounting all of the possible sources of revenue for the company.
• B) He is not including owners' equity as part of sales revenue.
• C) He is saying that the income statement is not as important as the balance sheet in portraying a company's fiscal health.
• D) He knows that many employees are dissatisfied with the direction the company is taking.
• E) He is not accounting for the effect that expenses will have on the income statement.

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Definitions:

Algorithms

Step-by-step procedures or formulas for solving problems or completing tasks, often used in computing and mathematical processes.

Adaptive Selling

The practice of customizing sales approach to the specific needs and behaviors of individual customers or situations.

Sales Force

A dedicated team or group within a company responsible for conducting sales and building relationships with prospects and customers to drive revenue.

Market Conditions

The state of the economy and the conditions of the business and consumer sectors that influence supply, demand, and pricing.