ven top levels of management need financial information for decision making with respect to the performance of the various components or segments of the enterprise.It is vital that managers understand how their corporation organizes itself and at what levels the various functions such as manufacturing, marketing, finance, and research and development are performed. Managers evaluate whether they are getting the financial and cost information they need to plan, control, and evaluate the performance of the corporate segment that they manage. Managers will also gain a better understanding standing of the impact of organization on cost determination and thereby gain a better understanding of the validity of the information they receive. The objective here is not to turn managers into accountants. Rather it is to turn managers into more informed users of the financial and cost information they receive from the accounting function and to be aware of information they need and re not getting. An enterprise, or reporting entity, may consist of many components such as subsidiaries (domestic and foreign) or divisions organized along geographical or product lines. Within each of these components some or all of the essential business functions, such as manufacturing, marketing, and research, may be performed. Other functions, such as legal, finance, and corporate administration, that benefit the entity as a whole are usually performed only at corporate headquarters. Internal financial reporting is the process of reporting disaggregate financial and cost information to each of the levels of management within as enterprise. The objective of internal reporting is to provide each level of management with relevant and reliable financial and cost information to enable it to plan, control, and evaluate the performance of the organizational segment and functions under its control.While presentation of prospective information may provide complete fi...
