Explain why choice A is the correct answer? Explain why the other answers are incorrect?,A security analyst obtained the following information from Prestopino Products’ financial statements:,Retained earnings at the end of 2006 were $700,000, but retained earnings at the end of 2007 had declined to $320,000.,The company does not pay dividends.,The company’s depreciation expense is its only non-cash expense; it has no amortization charges.,The company has no non-cash revenues.,The company’s net cash flow (NCF) for 2007 was $150,000.,On the basis of this information, which of the following statements is CORRECT?,A Prestopino had negative net income in 2007. ,B Prestopino’s depreciation expense in 2007 was less than $150,000. ,C Prestopino had positive net income in 2007, but its income was less than its 2006 income. ,D Prestopino’s NCF in 2007 must be higher than its NCF in 2006. ,E Prestopino’s cash on the balance sheet at the end of 2007 must be lower than the cash it had on the balance sheet at the end of 2006.
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