Which One of the Following Is True Concerning a CVP

question 25

Multiple Choice

Which one of the following is true concerning a CVP income statement?

• A)Costs and expenses are classified only by function.
• B)It is prepared for both internal and external use.
• C)It shows contribution margin instead of gross profit.
• D)Costs and expenses are classified as product or period.

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Definitions:

Financial Leverage

Use of borrowed funds to increase the potential return of an investment.

Basic Earning Power

A financial metric that measures a firm's ability to generate earnings from its operations before the impact of taxes and financing costs.

ACP

Average Collection Period, indicating the average number of days it takes a company to collect payments from its credit sales.

Du Pont Analysis

A framework for analyzing a company's return on equity (ROE) by breaking it down into its constituent components to assess operational efficiency.