Regarding Income Statement Formats,which of the Following Statements Is INCORRECT

question 143

Multiple Choice

Regarding income statement formats,which of the following statements is INCORRECT?

• A)A single-step income statement lists all the revenues and gains together under a heading such as Revenues and Gains.
• B)A single-step income statement lists income tax expense separately from all other expenses.
• C)A multistep income statement reports a number of subtotals to highlight important relationships between revenues and expenses.
• D)A multistep income statement is the only format that allows users to evaluate the profitability of the business.

Understand the classification of manufacturing costs into direct materials, direct labor, and factory overhead.

Distinguish between the concepts of prime costs and conversion costs.

Recognize the definitions of product costs and period costs, and their implications on financial statements.

Identify the different categories of inventory in the manufacturing process.

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, due to the scale of operation increasing.

Opportunity Cost

The abandonment of potential improvements from other possibilities once one choice is made.

Absolute Advantage

A country's ability to produce a good more efficiently than other countries, requiring fewer resources for the same output.

Autarky

National self-sufficiency; no economic interaction with foreigners.