Which of the Following Statements Is True

question 134

Multiple Choice

Which of the following statements is true?

• A) Standard setters encourage the use of the direct method over the indirect method.
• B) The direct method is known as the reconciliation method.
• C) Under U.S. GAAP, the indirect method starts with income before income taxes.
• D) All of these statements are true.

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Definitions:

Consumer Surplus

The gap in the total funds consumers are willing and financially prepared to allocate for a good or service, versus the funds actually allocated.

Producer Surplus

The difference between the amount producers are willing to supply a good for and the actual amount they receive when the good is sold.

Producer Surplus

The gap highlighting the difference between the initial asking price by sellers for goods or services and the ultimately received price.

Specific Tax

A tax that is levied as a fixed amount per unit on a particular good or service.