A Traditional GAAP Income Statement Does Not Help Managers to Predict

question 101

Multiple Choice

A traditional GAAP income statement does not help managers to predict the financial results of their decisions.Which of the following is a reason for this shortcoming?

• A)The GAAP statement is based on cost function rather than cost behavior.
• B)The GAAP statement is based on classification rather than function.
• C)The GAAP statement is based on cost behavior rather than cost function.
• D)The GAAP statement is based on function rather than classification.

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Definitions:

Specifying a Research Plan

The process of outlining the objectives, methodologies, and resources required for conducting a market research project to gather relevant data.

Descriptive Research

A research method that involves observing and describing the behavior of a subject without influencing it in any way.

Secondary Data

Information that was collected for another purpose but can be repurposed for a current research need; it includes sources like reports, studies, and previous research.