Absorption costing is the required inventory method for external financial reporting in most countries.

Question

Quizplus · Accepted Answer

Absorption costing is generally used for external financial reporting as it includes all manufacturing costs (direct and indirect) in the cost of a product, providing a more accurate representation of the true cost of production. However, some countries may allow or even require other inventory methods like variable costing or direct costing.

Absorption Costing Is the Required Inventory Method for External Financial