Which is the true statement?
A) In a CVP income statement costs and expenses are classified only by function.
B) The CVP income statement is prepared for both internal and external use.
C) The CVP income statement shows contribution margin instead of gross profit.
D) In a traditional income statement costs and expenses are classified as either variable or fixed.

Question

Quizplus · Accepted Answer

The CVP income statement shows contribution margin instead of gross profit, which is a key difference between traditional income statements. Option A is incorrect because in a CVP income statement costs and expenses are also classified as either variable or fixed. Option B may be true, but not necessarily always as it depends on the purpose for which the statement is prepared. Option D is incorrect because traditional income statements classify costs and expenses by function and not by their behavior.

Which Is the True Statement