Question

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

Answer 1

In a traditional income statement, costs and expenses are classified as either variable or fixed. The CVP income statement classifies costs and expenses by function.

Step-by-step explanation:

The true statement is a. In a traditional income statement, costs and expenses are classified as either variable or fixed.

In a traditional income statement, costs and expenses are categorized as either variable or fixed. Variable costs vary with the level of production or sales, such as raw materials or direct labor. Fixed costs, on the other hand, remain constant regardless of production or sales levels, such as rent or salaries.

The CVP (Cost-Volume-Profit) income statement, on the other hand, focuses on how costs and revenues change with changes in volume or activity levels. It classifies costs and expenses by function, such as manufacturing costs, selling costs, and administrative costs. The CVP income statement is typically used for internal decision-making and planning purposes.

Answer 2

a

Step-by-step explanation:

in traditional income the costs and expenses