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Accounting Information & Decision Making (Users of GPFR (Resource…
Accounting Information &
Decision Making
Process
Set Goals -> Make Plans -> Control -> Evaluate (Then go back to the 1st step again, repeat)
Seting Goals & Make Plans
A process of formulating a course of action.
Set goal, find alternatives ways to achieve goal & decide which alternative is the best to take action.
Exp: a budget is prepared for sales / expenses.
Control
A process of seeing that plans are, in fact, carried out.
Accountant will establish a system of controls to gather the necessary data to provide this information and feedback to management.
Exp: the Variance of Performance Reports comparing the budgeted figures with the actual of the period.
Evaluation
A process of studying the decision system to improve it.
"Was the original goal met?" "If not, why not?" Answers will adjust goals & continue the process.
Exp: when evaluating the Variance Reports a number of items may be highlighted for further consideration & action.
SAC 2: 3 groups of
External Users
Parties performing a review / oversight function
parliaments, governments, employer groups, media, special interest community groups
Resource Providers
Employees, lenders, creditors
Recipients of goods & services
Customers & beneficiaries, ratepayers, taxpayers
Users of GPFR
Resource providers
Recipients of goods & services
Management & governing bodies
Reviewers & overseers
The 7 categories that the framework lists users & their needs
1) Investors
2) Employees
3) Lenders
4) Suppliers & other trade creditors
5) Customers
6) Government & their agencies
7) Public
Limitations on the
usefulness of Acc Info
The info is only a part of that necessary to make 'effective' decisions
Accountancy is an inexact science
Economic conditions