Absorption Costing Is Required by the Generally Accepted Accounting Principles

question 14

True/False

Absorption costing is required by the Generally Accepted Accounting Principles (GAAP)for financial statements issued to investors,creditors,and other external users.

---

Definitions:

Sales

Transactions involving the transfer of goods or services from a seller to a buyer in exchange for money or other considerations.

Days' Sales in Receivable

A financial metric that calculates the average number of days it takes for a company to collect payments after a sale has been made.

Financial Records

Documents that capture all financial transactions of a business or individual, including income, expenses, assets, and liabilities.

Accounts Receivable Turnover

A financial ratio that measures how effectively a company collects cash from credit sales by comparing net credit sales with the average balance of accounts receivable.