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

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 the flaw in Adam's reasoning?

A) He is not taking into accounting all of the possible sources of revenue for the company.
B) He is not including owners' equity as part of sales revenue.
C) He is saying that the income statement is not as important as the balance sheet in portraying a company's fiscal health.
D) He knows that many employees are dissatisfied with the direction the company is taking.
E) He is not accounting for the effect that expenses will have on the income statement.