Textbook Notes (369,051)
Canada (162,364)
Accounting (533)
ACC 410 (34)
Peggy Woo (3)
Chapter 1

Chapter 1.docx

3 Pages
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Department
Accounting
Course Code
ACC 410
Professor
Peggy Woo

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Chapter 1: The Role of accounting information in ethical management decision-making Q1: How do uncertainties and biases affect the quality of decisions? • Uncertainties - issues and information about which we have doubt • Biases - preconceived notions adopted without careful thought • Decision quality - characteristics of a decision that affect the likelihood of achieving a positive outcome • Uncertainties and biases reduce decision quality Q2: What types of decisions do managers make for an organization? Management Decision Making Organizational Vision - Core purpose and ideology of the organization • Create value for stakeholders: – Owners (for-profit) – Donors (not-for-profit) – Constituents (government) – Employees – Customers/clients – Suppliers – Others – Management Decision Making Core Competencies - Organization’s strengths relative to competitors • Strengths Relative to Competitors: – Productivity – Skills – Knowledge – Technologies – Physical resources – Customer/supplier relationships – Reputation – Legal rights Organizational Strategies - Tactics used to take advantage of core competencies while working toward organizational vision • Long term goals • Organizational structure • Financial structure • Long term allocation – Investments/divestments – Nature of operations – Products or services and markets Operating Plans - Short term decisions that shape an organization’s day-to-day activities • Specific performance objectives • Short-term financing • Short-term resource allocation – Production of goods/services – Inbound and outbound logistics – Marketing and sales – Service – Technology – HR – Cash Flows Actual Operations - Various actions taken and results achieved over a period of time Q3: What is the role of accounting information in management decision-making? • Role of Accounting Information – Measuring, monitoring and motivating performance • Compare actual operating results • Reward employees • Report to stakeholders • Provide information for evaluation  Of organizational vision  Of core competencies  Of organizational strategies  Of operating plans • Strategic cost management - an approach to reducing costs while strengthening the organization’s strategic position • Balanced scorecard - a formal approach to strategic cost management that helps an organization to translate its vision into objectives that can be measured and monitored using financial and non-financial performance measures • External Reporting – Shareholder reports – Other stakeholder reports – Government reports • Internal Reporting – Support strategies – Support operating plans – Monitor and motivate Q4: How can managers make higher-quality decisions? Higher-Quality Decisions • Types of uncertainty that managers face – Accurately describe a problem – Identify all possible options – Know the outcomes of various options – Anticipate all future conditions Steps for Better Thinking • Steps for Better Thinking is a process to help address open-ended questions • Open-ended questions have no single correct sol
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