Asked by Jesus Armenta on May 30, 2024
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Although the traditional format income statement is useful for external reporting purposes, it has serious limitations when used for internal purposes because it does not distinguish between fixed and variable costs.
Traditional Format
A standard or conventional method of presenting financial information, such as income statements or balance sheets, that follows established accounting principles.
Internal Purposes
Uses within an organization, such as decision making or performance evaluation, not intended for external reporting.
- Clarify the differences between traditional and contribution format income statements.
Verified Answer
Learning Objectives
- Clarify the differences between traditional and contribution format income statements.
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