Why is it important that all companies present their income statement in a commonly agreed...
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Accounting
Why is it important that all companies present their income statement in a commonly agreed upon format which calculates a "Gross Profit" from our main production operations and then subtracts marketing / administration expenses to arrive at net income for financial accounting and reporting purposes? On the other hand, why is it okay, even desirable, that for managerial accounting we use different formats, such as the contribution margin format, if it is more useful to help us make good decisions about production costs and volumes? (Even if each company puts its own twist on it - making it hard to compare companies?) Then, discuss how the contribution margin format is extremely useful for internal management decision making?
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