Under the Fourth Directive Income Statements May Be Presented

question 4

Multiple Choice

Under the Fourth Directive income statements may be presented:

• A)Only horizontally by nature
• B)Only vertically by function
• C)Only horizontally by nature or by function
• D)Either horizontally or vertically by nature or by function

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Definitions:

Cost of Goods Sold

The financial charges directly linked to the fabrication of products sold by a company, involving both materials and labor input.

Net Income

The profit a company retains after all expenses and taxes have been removed from its revenue.

Inventory

A company's merchandise, raw materials, and finished and unfinished products which have not yet been sold.

Perpetual Inventory Method

An inventory management system where updates are made continuously to record sales and purchases instantly, maintaining constant and accurate inventory records.