Which of the following is an acceptable practice as it relates to interim financial reporting?
A)delayed recognition of permanent inventory market declines until year-end
B)delayed recognition of unplanned standard cost system variances until year-end
C)use of the variable costing inventory method for determining inventory costs
D)use of the gross profit method to determine interim inventory amounts

Question

Quizplus · Accepted Answer

The use of the gross profit method to determine interim inventory amounts is an acceptable practice for interim financial reporting according to GAAP. Delayed recognition of permanent inventory market declines until year-end and delayed recognition of unplanned standard cost system variances until year-end are not acceptable practices as they do not adhere to the matching principle. The use of the variable costing inventory method for determining inventory costs may also be problematic as it does not account for fixed production costs.

Which of the Following Is an Acceptable Practice as It