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17 Cards in this Set
- Front
- Back
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Uncertainty
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all decision makers forecast (make estimates) of the future
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Estimates In Accounting
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Accounting aids decision makers by forecasting and then incorporates these estimates by accruals
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Decision Relevant Information
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helps decision makers evaluate and choose among alternative courses of action.
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Relevant information must
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concern the future, vary with the action taken
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Incremental or marginal information
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is almost always relevant, new sources of cash or avoidable uses of cash are the most relevant information
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Irrelevant information
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unavoidable cash flows or sunk costs such as 1.financial statement costs 2.product costs or COGS 3.Period costs
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Business Risk
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characterized by 1.risk averse 2.risk neutral 3.risk seeking
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Examples of business risk
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economic/financial. political/social. reputation. weather. environmental/man-made. psychopathic/crimnal. informational/operation. people/legal
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Enterprise Risk Management (ERM)
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the process of continuously identifying, assessing, mitigating and monitoring relevant business risks. Business risk may reduce quality of decisions
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Bias inhibits
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uncertainty recognition, complete and thorough analyses, consideration of viewpoints/strategies. critical evaluation of priorities. continuous improvement
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types of bias
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information bias, cognitive bias (the way decision makers process information). predisposition bias (predetermined attitudes/preferences).
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Ethical Decision Making rewards individuals and organizations, can include...
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integrity, maintaining reputation, higher self-respect and improving social welfare
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IMA ethical values for accountants
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honesty, fairness, objectivity and responsibility
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Organizational Vision
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the core purpose of the org and shapes the current org and its future, important because they communicate to employees and other stakeholders the overall direction of operations
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Core competencies
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the strengths of the org relative to competitors, important to success of the org because value is added by these. the vision should be guided by the basic strengths
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Organizational Strategies
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developed around core competencies. important because they guide the long-term decisions, such as product lines offered
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Operating plans
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put into action the org strategies in short term. guide employees in their day to day operations.
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