Which of the following does Kershner assume? A) High revenues equate

QUESTION

Which of the following does Kershner assume?

A) High revenues equate to a healthy income statement.
B) Many factors must be taken into account to calculate the income statement.
C) The company’s revenue next year will be as good as this year’s.
D) Operating expenses have been relatively high this year.
E) Net sales are much lower than gross sales.

ANSWER

Answer: A
Explanation: A) Kershner assumes from the fact of strong revenues that a good income statement will result. Kershner does not assume Choices B, D, and E—if he did, his outlook for the company would not be so optimistic. He does not mention Choice C, which in any case is not relevant to this year’s income statement.