Which of the Following Inventory Costing Methods Shown Below Is

question 119

Multiple Choice

Which of the following inventory costing methods shown below is required by GAAP (Generally Accepted Accounting Principles) for external financial reporting?

• A) absorption costing
• B) variable costing
• C) throughput costing
• D) direct costing

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Definitions:

FIFO Method

An inventory valuation method that assumes the first items purchased are the first ones sold, standing for "First-In, First-Out."

Inventory Valuation

The method of calculating the cost associated with the inventory held by a business, influencing financial statements and taxation.

Net Realizable Value

The estimated selling price of goods, minus the estimated costs of completion and costs necessary to make the sale.

Interim Financial Report

A set of financial statements covering a period shorter than a full fiscal year, usually quarterly or semi-annually, to provide investors and other stakeholders with up-to-date information.