Following GAAP,the income statement issued to investors and creditors must ________.
A) be prepared in the traditional format
B) be prepared using variable costing
C) be prepared in the contribution margin format
D) show the value of contribution margin

Question

Quizplus · Accepted Answer

According to GAAP (Generally Accepted Accounting Principles), the income statement should be prepared in the traditional format that includes total revenue, cost of goods sold, gross profit, operating expenses, and net income. This format is widely used and accepted by investors and creditors for evaluating a company's profitability and financial performance. Variable costing and contribution margin formats are useful in internal management reporting but are not required for external reporting under GAAP. Showing the value of the contribution margin is not a requirement for the income statement under GAAP.

Following GAAP,the Income Statement Issued to Investors and Creditors Must