Which of the Following Is a True Statement Regarding Absorption

question 70

Multiple Choice

Which of the following is a true statement regarding absorption and/or direct costing?

• A)A firm can choose to use either absorption or direct costing for income tax purposes.
• B)A firm can choose to use either absorption or direct costing for financial reporting purposes.
• C)Direct costing assigns only direct materials and direct labor to products.
• D)Absorption costing includes fixed overhead in product costs whereas direct costing does not.

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Definitions:

U.S. Geological Survey

The U.S. Geological Survey is a scientific agency of the United States government that studies the landscape of the U.S., its natural resources, and the natural hazards that threaten it.

United States

A country in North America known for its significant cultural, economic, and political influence globally.

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The average number of children born to a woman over her lifetime within a specific population.

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Nations with significant levels of industrialization, characterized by high standards of living, advanced technological infrastructure, and diverse economic sectors.