Which of the Following Statements Regarding the Income Statements of Corporations

question 89

Multiple Choice

Which of the following statements regarding the income statements of corporations is not correct?

• A)Some corporations include cost of goods sold with the operating expenses.
• B)Some corporations show income tax expense as an operating expense rather than as a deduction from net income before income tax.
• C)If a gain or loss results from a transaction that is highly unusual, is clearly unrelated to routine operations, and is not expected to occur again in the near future, the gain or loss is shown as an operating expense.
• D)Corporations can use a variety of formats for the income statement.

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Definitions:

Fixed Factory Overhead Volume Variances

The difference between the budgeted and the actual volume of production, affecting the fixed factory overhead costs.

Inventory Levels

The quantity of goods that a company has in stock at any given time, important for meeting demand without overstocking.

Production

The method of producing products and services by merging work, materials, and technology.

Theoretical Standards

These are rigorous, often idealized cost and efficiency standards based on perfect operating conditions, used for comparison and performance analysis.