Which of the following inventory costing methods shown below is required by GAAP (Generally Accepted Accounting Principles) for external financial reporting?
A) absorption costing
B) variable costing
C) throughput costing
D) direct costing

Question

Quizplus · Accepted Answer

Absorption costing is required by GAAP for external financial reporting. This is because absorption costing assigns all manufacturing costs, including fixed overhead costs, to products. This provides a more accurate representation of the true cost of goods sold and ending inventory on the balance sheet.

Which of the Following Inventory Costing Methods Shown Below Is