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vagabundo [1.1K]
3 years ago
6

A traditional GAAP income statement does not help managers to predict the financial results of their decisions. Which of the fol

lowing is a reason for this shortcoming?
a. The GAAP statement is based on cost function rather than cost behavior.
b. The GAAP statement is based on classification rather than function.
c. The GAAP statement is based on cost behavior rather than cost function.
d. The GAAP statement is based on function rather than classification.
Business
1 answer:
Amiraneli [1.4K]3 years ago
7 0

Answer:

A) The GAAP statement is based on cost function rather than cost behavior.

Explanation:

Income statements that follow GAAP rules categorizes expenses based on their business function: product, selling or administrative.

While cost behavior categorizes costs based on how they influence a company's activities: variable, fixed and mixed. When a manager wants to measure the impact of any decision he/she makes, they need to use this type of categorization. For example, if fixed costs increase, what is the new break even point? If variable costs decrease, how is the marginal cost affected?

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Answer:

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Trade offs is also known as opportunity cost. It is what is sacrificed in order to carry out a certain activity. If Daniel eats the pizza, he's sacrificing a more healthy body for the extra slice of pizza.

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George is selling his house. he received an offer from katie for $200,000 but decided to counter-offer for $210,000. what does t
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Which of the following statements best represents the reason for the accounting equation?
NikAS [45]

Answer:

c. The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

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In every balance sheet, the accounting equation has used that means

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The total assets comprises of current assets, fixed assets and the intangible assets

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