Which Is the True Statement

question 169

Multiple Choice

Which is the true statement?

• A) In a CVP income statement costs and expenses are classified only by function.
• B) The CVP income statement is prepared for both internal and external use.
• C) The CVP income statement shows contribution margin instead of gross profit.
• D) In a traditional income statement costs and expenses are classified as either variable or fixed.

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Definitions:

Preferred Stock

A class of share ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividends.

Equity Security

A financial instrument representing ownership interest in a company, such as stocks, which entitles shareholders to vote on corporate matters and receive dividends.

Debt

An amount of money borrowed by one party from another, under the agreement that it will be repaid, often with interest.

Common Stock

A type of security signifying ownership in a corporation and entitling the holder to a share of the company's profits, essentially a mode of holding equity in the corporation.