For example restaurants do not calculate the full

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Unformatted text preview: assessment, or comparative analyses, it does not need to become involved in the effort to calculate full costs. Rather, it can delegate the responsibility for cost calculation to the accounting staff. Generally accepted accounting principles (GAAP) require manufacturing organizations to calculate the full manufacturing cost of the products they produce to determine a cost of goods sold figure that abides by GAAP’s matching principle. Therefore, these organizations must undertake a full cost accounting effort if they are to receive a clean opinion on their audited financial statements. Senior management usually does not become involved in this effort in any significant way. In most merchandising and service organizations, full cost accounting is not required by GAAP. Indeed, in merchandising organizations, the cost of goods sold figure generally includes only the cost of the items that the company sold during the relevant accounting period. All other operating items are expensed as incurred. Few if any me...
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