Question

(a) Explain the advantages of using Value Added Statements (VAS) for interdivision for comparisons in decentralized firm.

Answer 1

Value added statement is financial statement which shows how much value (wealth) has been created by an enterprise through utilization of its capacity, capital, manpower, and other resources, and how it is allocated among different stakeholders (employees, lenders, shareholders, government, etc.) in an accounting period.