Explain the Difference Between the Gross Margin Format and the Contribution

question 50

Essay

Explain the difference between the gross margin format and the contribution margin format for the income statement. What information is highlighted with each?

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Definitions:

Withdrawals Account

An account in bookkeeping where amounts drawn out from the business by the owner for personal use are recorded.

Revenue Account

An account that tracks the income earned by a company from its operational activities, excluding expenses.

Fees Earned Account

An income account that records the revenue earned from services provided or fees charged.

Capital Account

An account on the balance sheet representing the cumulative amount of the company's earnings, investment, or losses.