Which of the following is true of the traditional format of the income statement?
A)It is prepared under the variable costing method.
B)It shows contribution margin as a line item.
C)It is not allowed under the US GAAP.
D)It is prepared under the absorption method.

Question

Quizplus · Accepted Answer

The traditional format of the income statement is prepared using the absorption method, which allocates all manufacturing costs to the units produced. Option A is incorrect because the income statement format is not related to the costing method used. Option B is incorrect because contribution margin is not typically shown as a separate line item on the traditional format. Option C is incorrect because the traditional format is allowed under US GAAP.

Which of the Following Is True of the Traditional Format