Limitations of Variable Costing – GAAP and External Reports: Learning Objectives: What are the limitations of variable costing? Is variable costing acceptable for external reports? Do financial statements prepared under variable costing system conform to generally accepted accounting principles (GAAP)? Practically speaking, absorption costing
External Reports ia a company produced report containing information suitable for public consumption. External reports can also be used as a way for a company to disseminate information that will help it achieve a strategic objective.
Segmented Financial Information on External Reports: The Financial Accounting Standards Board (FASB) now requires that companies in the united states include segmented financial and other data in their annual reports and that the segmented reports prepared for external users must use the same method