GAAP allows companies to choose between time-based, activity, group, or composite cost allocation methods, but once the method is chosen it must be applied consistently over time. This ensures that financial information is comparable.

Question

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GAAP (Generally Accepted Accounting Principles) requires consistency in the application of accounting methods, including cost allocation methods, to ensure comparability of financial information over time.

GAAP Allows Companies to Choose Between Time-Based, Activity, Group, or Composite