The Accounting Environment: What Is Accounting and Why Is It Done?
This is a good critical thinking question. Many students will assume an answer and provide it. The
key is understanding the factors that go into the choice that person is makingthe objectives she
has in making the trip and the constraints she faces. The purpose of the question is to realize that
solutions are context based. You really cant provide an answer that you can be sure is helpful until
you ask some questions. Does she intend to drive, in which case she wants to know the best route
for the trip? If so, does she prefer a scenic route or the route that will get her there in the shortest
time, or the least distance? Other modes of transportation can be introduced (train, plane, bus,
roller skates). The solution should consider constraints (does she have the money for a plane ticket,
time for the scenic route, a drivers license if a drive is recommended). Many variations are
possible, but the point is that no useful answer can be given without knowing more about the
criteria she will apply in making the decision.
Various answers might be provided, but stakeholders would include students, faculty and staff,
government agencies who provide funding, potential donors, alumni, and potential students.
Students/potential students want to know that they will obtain the best university
experience for them. They may want to know whether the university has above average library
or computing facilities. They may want to know the quality of the programs, the reputation of
the faculty, the availability of fitness facilities, or even whether its a party school. Various
sources of information could be consulted. University calendars, university fairs, discussions
with current students, faculty, and alumni, and independent rankings may provide useful
Faculty will want to know that the university is committed to excellence in teaching and
research and will provide the needed resources, particularly for the programs they value. They
will want to detect trends in funding of programs, resources for research and teaching or
salaries. They will look at proposed budgets and hiring plans as well as financial statements of
Governments want to assess the financial needs of universities to determine their funding
requirements. They will look to determine how past funding amounts have been used,
projected enrollments and budgets and the participation of other sources of funding.
Potential donors want to know that the money they give will be used for the purpose for
which it is given. They will look for accountability for past donations, plans for the future, and
the needs of the institution.
Alumni might be interested in the perceived success or prestige of the university.
A claim by a chain of donut shops that they serve the best coffee in the world is not very credible
since it is very unlikely that they have evaluated even all coffee shops in their own community let
Copyright 2010 McGraw-Hill Ryerson Ltd. 1
John Friedlan, Financial Accounting: A Critical Approach, 3ealone the country or the world. The claim would be more credible, for example, if they reported
that some independent organization had awarded them first prize in a contest, which had received
entries from many countries. To determine whether the chain had the worlds best coffee would be
very difficult, since best is a subjective matter with differing tastes across countries and
individuals. Conceivably one could sample the coffee served by the best-known chains or look to
the opinions of experts. Perhaps an internet website that invites everyones opinion might provide
helpful information. Most people would not consider the cost of obtaining a high level of certainty
about the claim to be worth the benefits of finding out.
Individual responses will vary considerably to this question. However, its necessary to clearly
establish the criteria applied for selecting a university and those criteria should be tailored to the
circumstances of the cousin. Then consideration can be given to what and how relevant
information should be gathered and then to how the universities will be ranked. Considerations
would include areas of interest (science, arts, business), career goals, academic performance,
resources to pay for university and accommodation away from home if appropriate, extra-
curricular and social interests, and any other personal interests. This question has no right answer.
What is crucial is the approach used to solve the problem and to recognize that a one-size fits all
approach is not appropriate.
Many different measurements might be suggested. The following list is not comprehensive:
Class size indicates how much attention an individual student might receive from their
professors. This would be fairly easy to measure since number of students in a