A cost concept used for the purposes of external reporting will always be appropriate for internal reporting.

Question

Quizplus · Accepted Answer

A cost concept used for the purposes of external reporting may not be appropriate for internal, routine reporting. For external reporting, GAAP requires costs to be fully expenses in the year they are incurred. However, those costs could be capitalized and than amortized or written off as expenses over several years.

A Cost Concept Used for the Purposes of External Reporting