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

question 75

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 Eve assuming?

• A) That revenues this year were not as high as last year's
• B) That revenues are not as high as Adam thinks they are
• C) That selling expenses exceeded administrative expenses this year
• D) That many other factors must be taken into account to arrive at an income statement
• E) That income taxes will be high this year

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Definitions:

Management Powers

Refers to the authority given to managers or directors of a corporation or organization to make significant decisions in the day-to-day operations.

Limited Liability

A legal principle that shields an investor's personal assets from the debts and liabilities of the company, limiting loss to the amount invested.

Certificate of Limited Partnership

A legal document filed with a state governmental body that establishes the existence of a limited partnership.

Liability

Legal responsibility for one's actions or omissions, which can lead to being required to make restitution or compensation for harm caused.