For External Reporting Purposes, U

question 206

Multiple Choice

For external reporting purposes, U.S. GAAP allows companies to use

• A)either the traditional format or the contribution margin format.
• B)only the contribution margin format of the income statement.
• C)only the traditional format of the income statement.
• D)the variable costing format.

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Definitions:

Information

Data or knowledge communicated or received concerning a particular fact or circumstance.

Principal

In legal and financial contexts, the original sum of money loaned or invested, before interest; in agency, the person or entity who authorizes an agent to act on their behalf.

Specific Authority

Power or permission given to an agent for specific tasks or transactions on behalf of the principal.

Necessarily Incidental

Activities or actions that are not central but are unavoidably part of or related to accomplishing a main activity or goal.