What is the appropriate treatment in an interim financial report for variances arising from the use of a standard costing system?
A) The variances are always ignored for interim reporting.
B) The variances should always be reflected in gross profit on an interim income statement.
C) The variances expected to be absorbed by year-end should not be reflected in the interim statement.
D) The variances should always be reflected in the interim income statement but not the interim balance sheet.
E) The variances should only be reflected in the interim balance sheet.

Question

Quizplus · Accepted Answer

Variances expected to be absorbed by year-end should not be reflected in the interim statement, as interim reports aim to provide a fair view of the financial position and performance, considering the temporary nature of some variances.

What Is the Appropriate Treatment in an Interim Financial Report