Question

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

1.only the traditional for at of the income statement.
2.only the contribution margin format of the income statement.
3.the variable costing format.
4.either the traditional format or the contribution margin format,

Answer 1

1. Only the traditional format of the income statement.

Step-by-step explanation:

For external reporting purposes, United States of America, Generally Accepted Accounting Principles (GAAP) allows companies to use only the traditional format of the income statement.

United States of America, Generally Accepted Accounting Principles (GAAP) is the accounting principles, procedures and standard issued by the Financial Accounting Standards Board (FASB) and adopted by the United States of America, Securities and Exchange Commission (SEC).

When accountants prepare and compile financial statements for public firms, it must be in line with United States of America, Generally Accepted Accounting Principles (GAAP).