AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Learning Objective: 02-05 Prepare income statements for a merchandising company using the traditional and contribution formats. Level: 1 Easy 21. In a contribution format income statement, sales minus cost of goods sold equals the gross margin. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Learning Objective: 02-05 Prepare income statements for a merchandising company using the traditional and contribution formats. Level: 1 Easy 22. In a traditional format income statement for a merchandising company, the cost of goods sold reports the product costs attached to the merchandise sold during the period. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Learning Objective: 02-05 Prepare income statements for a merchandising company using the traditional and contribution formats. Level: 1 Easy 23. Although the contribution 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. FALSE Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Learning Objective: 02-05 Prepare income statements for a merchandising company using the traditional and contribution formats. Level: 1 Easy 24. In a contribution format income statement for a merchandising company, cost of goods sold is a variable cost that gets included in the "Variable expenses" portion of the income statement. TRUE
AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Learning Objective: 02-05 Prepare income statements for a merchandising company using the traditional and contribution formats. Level: 1 Easy 21. In a contribution format income statement, sales minus cost of goods sold equals the gross margin. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Learning Objective: 02-05 Prepare income statements for a merchandising company using the traditional and contribution formats. Level: 1 Easy 22. In a traditional format income statement for a merchandising company, the cost of goods sold reports the product costs attached to the merchandise sold during the period. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Learning Objective: 02-05 Prepare income statements for a merchandising company using the traditional and contribution formats. Level: 1 Easy 23. Although the contribution 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. FALSE Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Learning Objective: 02-05 Prepare income statements for a merchandising company using the traditional and contribution formats. Level: 1 Easy 24. In a contribution format income statement for a merchandising company, cost of goods sold is a variable cost that gets included in the "Variable expenses" portion of the income statement. TRUE
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