The costing approach that meets the requirements of financial accounting and tax reporting requirements is:
A)absorption costing.
B)throughput costing.
C)standard costing
D)variable costing.

Question

Quizplus · Accepted Answer

Absorption costing is the most commonly used costing approach for financial accounting and tax reporting purposes. It meets the requirements of generally accepted accounting principles (GAAP) and tax laws by allocating all manufacturing costs (including both variable and fixed costs) to the cost of goods sold. This ensures that all costs are accounted for and included in the financial statements and tax returns. The other costing approaches, such as throughput costing, variable costing, and standard costing, may be useful for certain management decisions, but they do not meet the requirements of financial accounting and tax reporting.

The Costing Approach That Meets the Requirements of Financial Accounting