How do costing choices affect financial reporting and mamangement?

Visualizing cost flows

Earnings management

In this video I demonstrate that a good knowledge of management accounting techniques enables companies to manage earnings through the classification of costs, the definition of cost pools and the selections of allocation bases. This makes these steps very sensitive from the perspective of financial reporting and explain why these choices are partially regulated and audited.

earnings management refers to all methods by which managers knowingly relate the reporting of income.

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