Which accounting method is used for external reporting?
A)absorption costing
B)variable costing
C)transfer price costing
D)responsibility costing

Question

Quizplus · Accepted Answer

Absorption costing is commonly used for external reporting as it complies with Generally Accepted Accounting Principles (GAAP). It includes both variable and fixed costs in the cost of goods sold, providing a more accurate view of the cost of producing goods. Transfer price costing and responsibility costing are internal management accounting methods, while variable costing only includes variable costs in the cost of goods sold and is not accepted for external reporting under GAAP.

Which Accounting Method Is Used for External Reporting