On a Budgeted Income Statement, the Gross Margin Is Determined

question 35

Multiple Choice

On a budgeted income statement, the gross margin is determined by:

• A) Revenue + cost of goods sold
• B) Cost of goods sold + operating costs
• C) Revenue - operating costs
• D) Revenue - cost of goods sold

---

Definitions:

Section 1245

A section of the U.S. Internal Revenue Code that defines the tax treatment of the gain from the sale of depreciable property.

Recapture

A process in which previously deducted or credited amounts are added back to taxable income or tax liability under certain conditions.

Short-term Capital Gain

A profit from the sale of an asset held for one year or less, taxed as ordinary income.

Long-term Capital Loss

A loss realized from the sale of a capital asset held for more than one year, which can offset capital gains and reduce taxable income.