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, if true, would strengthen Michaels's argument?

A) The company's gross sales went up from the previous year.
B) Total operating expenses were high in the current year.
C) The company has only one part-time accountant.
D) There were few sales returns in the current year.
E) Offshoring allowed the company to trim administrative salaries by 25 percent.