Select the Incorrect Statement Regarding Upstream and Downstream Costs

question 132

Multiple Choice

Select the incorrect statement regarding upstream and downstream costs.

• A) Companies normally incur significant downstream costs.
• B) To be profitable, companies must recover the total cost of developing, producing, and delivering products.
• C) Pricing decisions must consider both upstream and downstream costs in addition to manufacturing costs.
• D) Upstream and downstream costs are reported as product costs on the income statement.

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Definitions:

Net Income

The total earnings of a company after deducting all expenses, including taxes and costs, from its total revenues, indicating its profitability.

Generally Accepted Accounting Principles

A set of standards, principles, and procedures that guide the accounting practices and financial reporting in the U.S.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and net income.

Balance Sheet

A document detailing a business's financial status at a given moment, listing the company's resources, debts, and owner's equity.