2.3 Net Income Differential
2.3.1 Directions of Net Income Differential Table 4 reports the number of companies that have negative net income adjustments in each year. It can be seen that there are a greater number of companies having negative adjustments in the majority of the years studied regardless of whether examining in aggregate or by industry.
In other words, companies reported net incomes under absorption costing that are higher than those, which would have been under variable costing are more pervasive.