Which inventory costing system is required by GAAP for financial reporting purposes?
A) direct costing
B) absorption costing
C) standard costing
D) variable costing

Question

Quizplus · Accepted Answer

Absorption costing is required by GAAP for financial reporting purposes. This is because absorption costing allocates all manufacturing costs, including direct and indirect costs, to the products being produced. This method provides a more accurate representation of the true costs of production and is consistent with the matching principle of accounting. Direct costing, variable costing, and standard costing are not required by GAAP for financial reporting purposes.

Which Inventory Costing System Is Required by GAAP for Financial