Absorption costing is required by the Generally Accepted Accounting Principles (GAAP)for financial statements issued to investors,creditors,and other external users.

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Absorption costing is required by GAAP for financial statements as it considers all production costs, including both variable and fixed costs, in the cost of goods sold. This provides a more accurate representation of the true cost of producing a product or providing a service.

Absorption Costing Is Required by the Generally Accepted Accounting Principles