Which of the following does Michaels assume?
A) Revenues this year were not as high as last year's.
B) Revenues are not as high as Kershner thinks they are.
C) Selling expenses exceeded administrative expenses this year.
D) Other factors must be taken into account to arrive at an income statement.
E) Income taxes will be high this year.
Answer: D
Explanation: D) Michaels cautions that other factors in addition to revenue must be taken into account to arrive at a full and accurate income statement. Choice A: Revenues from last year are not relevant to this year's income statement. Michaels does not dispute Kershner's statement of high revenues, Choice B. Although Choices C and E are factors that impact the income statement, Michaels does not assume anything specifically about them.
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