Q11 - In contemplating major purchases

[hojung]

I was confused between D and E and I picked E which was wrong.
Can you please explain it to me why other answers wrong.
it will be really helpful.
Thank you

[secretad22]

Let us look at the core of this argument.

Often, businesses only look at the amount of money left from monthly revenues minus monthly expenses to see if they can make a purchase.

+

A lot of expenses do not occur per month. By focusing only on the monthly expenses, and not the others, a business can end up overextended.

=

So it is concluded that the use of a cash-flow statement is critical for all businesses.

So you tell me, do those premises automatically entail that conclusion? Of course not!

A strengthen question often has as its correct answer, an assumption, that...if we were to make explicit...would strengthen the argument by some margin. That assumption can be sufficient or necessary.

In this case, (D) states the cash-flow statement is the only way to keep track of both the monthly and non-monthly expenses. This would be great to know! Then we know that a business MUST have this to not overextend on purchases when not accounting for all types of expenses.

Choice (E) does not address that the cash-flow statement has any relevance to businesses, which is what the argument threw at us at the very end.

[bbirdwell]

Nice explanation!!

Let me know if you have additional questions!

[OluwadamilolaA920]

Why is B wrong?