Kershner Says: "Our Income Statement Should Be Looking Good This

Multiple Choice

Kershner says: "Our income statement should be looking good this year. We've been doing excellent business this year, so we have a lot of gross sales. The company should be in good shape." Michaels replies: "It remains to be seen how our income statement will look overall. In spite of strong sales revenue, the overall income statement might not be as good as we might hope."
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) Gross profit is much lower than gross sales.