External financial reporting requires which costing method?
A)standard costing.
B)variable costing
C)full-absorption costing.
D)normal costing.

Question

Quizplus · Accepted Answer

External financial reporting requires full-absorption costing, which allocates all overhead costs to products. This costing method is required for financial reporting purposes under generally accepted accounting principles (GAAP) to accurately report the cost of goods sold and inventory on the balance sheet. Standard costing, variable costing, and normal costing are all useful for internal reporting and decision-making purposes but are not compliant with GAAP for external financial reporting.

External Financial Reporting Requires Which Costing Method