Role of Accounting Information in Decision Making Process
Accounting information plays an influential role in guiding decision making process in an organization. Our research shows that not all organizations would use accounting information in the same manner even though they might all utilize it for making better decisions. However some organizations might limit those decisions to the area of cost control while others would be comfortable using accounting information for making all kinds of strategic decisions from expansion, contraction to downsizing and technological overhaul.
Thus accounting information indeed has a significant place in the decision making process. However it all comes down to the level of trust that exists in a firm between accountants and senior management. The senior management must fully accept the information presented to them and also be able to rely on that in order for it to take it seriously and make decisions based on that information.
ROLE OF ACCOUNTING INFORMATION IN DECISION MAKING
Accounting information can have a significant bearing on decision making process. A decision requires choosing the right course of actions from among a list of possible options and alternatives. However this decision has to be guided by more than one thing such as accounting information, intuition, trends etc. The data and information available with accounting managers can be utilized to make important decisions such as expansion, downsizing, and recruitment and so on.
Management accounting plans an important role in guiding important decisions. It is defined as:
"[…] the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication...
Accounting for Decision Making Shelter Partnership's Case Study Purposes of Cost Information The intended purpose of cost information is to provide a basis for determining the expenses and revenues associated with a particular activity (or cost object). Generally, cost and income is measured in order to determine net income or profit margins. However, as Shelter Partnerships is a non-profit, the cost information forms a basis for the allocation of resources and to assist
" (2004) Ricol states in relation to the audit area that "...actions were recommended in two primary areas: 1) Reducing threats to auditor independence; and 2) Strengthening audit quality control processes. (Ricol, 2004) In regards to corporate management and governance, it is related in Ricol's speech that the task force called for corporate boards to "demonstrate greater accountability for the information, financial management and internal controls necessary to produce trustworthy information. Sound corporate
The two scenarios are likely to sway employees to provide false information if they are encouraged. However, the relationship had much strength in the positive. Therefore, in this study, there were clear choices. The participants were required to either tell the truth or lie. If things were easy for individuals in the world, lines of making moral decisions tend to be much fuzzier, however, the bottom line remains the same
Accounting Information for Decision Making Corporate Confirming on Water Risk (Feb 2010) indicates that the Global Confirming Initiative (GRI) G3 Guidelines' five water-related indications (total withdrawal volume by source, ponds considerably impacted by distributions, percentage and total amount of water recycled and used again, total water discharge by quality and destination, and identification water physiques and related habitats impacted by discharges) make the perfect beginning point for assessing and confirming water
Decision Making Ethics is a philosophical term derived from the Greek word "ethos," meaning character or custom (Sims, 1994, p. 16). Ethics, therefore, is not just an ethereal concept belonging to the domain of philosophers and theologists, but a universal phenomenon that pervades the very functioning of individuals and society. Indeed, ethics can be said to be the guiding set of principles, based on which individual character, social and organizational custom
" To that end, the Treasury Department would limit executive compensation for institutions receiving "exceptional assistance" (Geithner and Summers, 2009). Troubles continued in the financial sector -- both Citigroup and the Bank of America needed second rounds of capital infusions, and federal guarantees against losses totaling tens of billions more -- while Ben S. Bernanke, the Federal Reserve chairman, warned that more capital injections might be needed to further stabilize the
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