Which of the Following Statements Is True Regarding Absorption Costing

question 133

Multiple Choice

Which of the following statements is true regarding absorption costing?

• A)It is not the traditional costing approach.
• B)It is not permitted to be used for financial reporting.
• C)It is not permitted to be used for tax reporting.
• D)It assigns all manufacturing costs to products.
• E)It requires only variable costs to be treated as product costs.

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Definitions:

Financial Statements

Documents that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, indicating the company's profitability.

Carrying Amount

The net value of an asset or liability according to a company's balance sheet.

Supplies Used

Expenses related to consumable items used in the operation of a business.