A cost concept is typically used for the external reporting purpose of accounting and may not be an appropriate concept for the internal or routine reporting to managers.

Question

Quizplus · Accepted Answer

The cost concept focuses on the historical cost of assets rather than their current market values. This is necessary for external reporting purposes as it provides stakeholders with accurate and reliable financial statements. However, for internal reporting to managers, other concepts such as the management/cost accounting concept may be more appropriate.

A Cost Concept Is Typically Used for the External Reporting