Which of the Following Is True of the Traditional Format

question 43

Multiple Choice

Which of the following is true of the traditional format of the income statement?

• A) It is prepared under the variable costing method.
• B) It shows contribution margin as a line item.
• C) It is not allowed under GAAP.
• D) It is prepared under the absorption method.

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Definitions:

Stockholders

Individuals or entities that own shares in a corporation, also commonly referred to as shareholders.

Borrowed Money

Funds that are obtained through loans or credits, which must be repaid with interest.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, including issuing debt, issuing equity, and paying dividends.

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business, indicating the organization's liquidity.