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:

Debit To Cash

An accounting entry that increases the cash balance in a company's books, reflecting an influx of money.

Mail Receipts

Documentation or evidence of receiving goods or correspondence through the postal service.

Authorized To Sign Checks

Designation given to individuals who are officially permitted by a business or organization to sign checks on behalf of the entity.

Cash Disbursement Transactions

Financial transactions that involve the outflow of cash to settle obligations or purchase assets.