Which of the Following Would Be Reported on a Variable

question 3

Multiple Choice

Which of the following would be reported on a variable costing income statement?

• A)Gross margin
• B)Cost of goods available for sale
• C)Total cost of goods sold
• D)Contribution margin
• E)Work-in-process inventory

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Definitions:

Allowance Method

An accounting technique that estimates and accounts for bad debts or credit losses in financial statements.

Uncollectible Receivables

Accounts receivable that a company does not expect to collect and writes off as a loss.

Credit Sales

Sales transactions where the payment is deferred to a future date, typically resulting in the creation of accounts receivable.

Allowance for Doubtful Accounts

An allowance for doubtful accounts is a contra-account that reduces the total receivables on the balance sheet by the amount that is estimated to be uncollectible.