The costing approach that meets the requirements of financial accounting and tax reporting requirements is:
A) variable costing.
B) absorption costing.
C) throughput costing.
D) standard costing

Question

Quizplus · Accepted Answer

Absorption costing is used for financial accounting and tax reporting requirements as it includes all manufacturing costs in the cost of goods sold, including both fixed and variable costs. Variable costing does not include fixed costs, which can lead to distorted financial statements. Throughput costing focuses only on direct materials and direct labor and may not be suitable for all types of businesses. Standard costing is used for internal management purposes and may not necessarily meet the requirements of financial accounting and tax reporting.

The Costing Approach That Meets the Requirements of Financial Accounting