alleryStart learning →Absorption costing is named as the acceptable reporting method under:
AUnion rules
BLocal bylaws
CClub charters
DGAAP rules
Answer & Solution
Correct answer: D. GAAP rules
1. One of the two costing methods is the one outside reporting must use.
2. Absorption costing is the acceptable reporting method under GAAP.
3. It is also the method required for tax preparation in the United States.
4. So GAAP is the answer.
_Source: OpenStax Principles of Accounting Volume 2, Managerial Accounting (CC BY-NC-SA 4.0), Ch 6 'Activity-Based, Variable, and Absorption Costing', sections 6.1-6.5_
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