...Accounting, 8th Edition Chapter 1 – Decision Making and the Role of Accounting 1. Economic Decisions Many of the decisions that we make involve the use of economic resources for consumption or investment purposes. Other factors that need to be considered when making decisions are: 1. Personal taste. 2. Social factors. 3. Environmental factors. 4. Religious and/or moral factors. 5. Government policy. Steps in the decision making process: 1. Establish goals. 2. Gather available information on alternatives. 3. Determine consequences of alternatives. 4. Choose a course of action. In a complex society decision makers have to rely on data supplied by specialists. The accountant (as a specialist): o Is involved in steps 2 and 3 of the decision making process; o To offer advice regarding step 4; and o To measure the outcomes or consequences of the decision-making process. 2. Accounting Defined “The process of o Identifying - observing economic events and determining which of those events represents economic activities relevant to a particular business; o Measuring; o Recording – classification and summarisation; and o Communicating – preparing and distributing accounting reports economic information to permit informed judgements and economic decisions by users of the information”. 3. Users of Accounting Information The first objective of accounting is to provide information in reports which can be used by internal...
Words: 800 - Pages: 4
...Accounting, 8th Edition Chapter 1 – Decision Making and the Role of Accounting 1. Economic Decisions Many of the decisions that we make involve the use of economic resources for consumption or investment purposes. Other factors that need to be considered when making decisions are: 1. Personal taste. 2. Social factors. 3. Environmental factors. 4. Religious and/or moral factors. 5. Government policy. Steps in the decision making process: 1. Establish goals. 2. Gather available information on alternatives. 3. Determine consequences of alternatives. 4. Choose a course of action. In a complex society decision makers have to rely on data supplied by specialists. The accountant (as a specialist): o Is involved in steps 2 and 3 of the decision making process; o To offer advice regarding step 4; and o To measure the outcomes or consequences of the decision-making process. 2. Accounting Defined “The process of o Identifying - observing economic events and determining which of those events represents economic activities relevant to a particular business; o Measuring; o Recording – classification and summarisation; and o Communicating – preparing and distributing accounting reports economic information to permit informed judgements and economic decisions by users of the information”. 3. Users of Accounting Information The first objective of accounting is to provide information in reports which can be used by internal...
Words: 800 - Pages: 4
