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Generally Accepted Accounting Principles (GAAP) MCQs

Why are direct costs added to the value of the inventory?

They are costs directly related to the creating of an inventory item and without them, there would be no inventory.

It is required by the IRS tax laws.

It helps reduce expenses on the income statement.

It inflates inventory values on the balance sheet which looks good to the investors.

Answer

Correct Answer: They are costs directly related to the creating of an inventory item and without them, there would be no inventory.

Explanation:

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