GAAP requires that inventory costs should also include the costs of the purchasing department and other general administrative costs associated with the acquisition and distribution of inventory.

Question

Quizplus · Accepted Answer

GAAP requires that inventory costs include all costs that are directly attributable to the acquisition and preparation of inventory for sale, such as purchase price, import duties, and freight. General administrative costs, unless they are directly related to the acquisition or processing of inventory, should not be included in inventory costs.

GAAP Requires That Inventory Costs Should Also Include the Costs