Question

For external reporting​ purposes, U.S. GAAP allows companies to use

A. the variable costing format.
B. only the traditional format of the income statement.
C. only the contribution margin format of the income statement.
D. either the traditional format or the contribution margin format.

Answer 1

B. only the traditional format of the income statement.

Step-by-step explanation:

There is only one format under US GAAP, that is the traditional format, the variable costing format or the contribution margin format are all concepts of cost accounting, and not of accounting.

As per US GAAP the books are prepared in traditional format income statement. No other format is followed for reporting and presenting the financial statements of the company.

Therefore, correct option is:

Option B