For external-reporting purposes, generally accepted accounting principles require that net income be based on:
A) absorption costing.
B) variable costing.
C) direct costing.
D) semivariable costing.
E) activity-based costing.

Question

Quizplus · Accepted Answer

Generally Accepted Accounting Principles (GAAP) require that external financial reports use absorption costing for reporting net income. Absorption costing includes all manufacturing costs, both fixed and variable, in the cost of a product.

For External-Reporting Purposes, Generally Accepted Accounting Principles Require That Net