Which of the following, if true, strengthens Kershner’s argument? A)

QUESTION

Which of the following, if true, strengthens Kershner’s argument?

A) The total operating expenses were high in the current year.
B) The company’s rent went up 30 percent from the previous year.
C) The cost of goods sold was low compared to net sales.
D) The company is a small one compared to its competitors.
E) The company has a solid core of fixed assets.

ANSWER

Answer: C
Explanation: C) This means that gross profit will be relatively high, which makes it more likely that the company will have a positive income statement. Choice A weakens Kershner’s argument since it suggests that net income will be lower than he suggests. Choice B tends to weaken Kershner’s argument since rent is an operating expense. Choices D and E are statements that do not directly impact the company’s income statement.