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ch01 - CHAPTER 1 ACCOUNTING INFORMATION FOR DECISION MAKING...

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Unformatted text preview: CHAPTER 1 ACCOUNTING: INFORMATION FOR DECISION MAKING TRUE/FALSE 1. The Decision Framework applies to all business-related decisions, but not to personal decisions. LO1 – False The four-step process applies equally to all decisions, whether personal or business-related. 2. Business decisions generally have few options. LO1 – False Business decisions frequently have numerous options. 3. Every option in making a decision presents a unique trade-off between benefits and costs. LO1 – True 4. Effective decision makers ensure that the value of the chosen decision option exceeds its opportunity cost. LO1 –True 5. The value of an option must always be expressed in monetary terms. LO1 – False Even though most businesses measure value in terms of money, or profit, value need not be a monetary amount. 6. Unlike individuals whose goals might have several factors, organizations tend to have focused goals. LO2 – True 7. The key difference between individual and business decisions relate to Step 2 of the four- step framework, that is, identifying options. LO2 – False The key difference between individual and business decisions relates to step 1 of the four-step framework – that is, organizations need to ensure that the goals of individual employees mesh with the focused goals of the organization. 8. To accomplish their goals, organizations not only need to allocate resources effectively, but also need to motivate employees to focus on organizational goals. LO2 – True 9. A for-profit business usually specifies organizational goals according to profit motive. 1-1 LO2 – False A for-profit business usually specifies organizational goals according to ownership. 10. Decisions that best attain individual goals may not necessarily agree with the organization’s goal of maximizing profit. LO2 – True 11. Control decisions relate to motivating, monitoring, and evaluating performance. LO3 – True 1-2 Accounting: Information for Decision Making 12. Examining past performance is not involved in control decisions. LO3 – False Many control decisions involve examining past performance, with the purpose of improving subsequent plans. 13. The planning and control cycle is a long-term cycle normally taking months to complete. LO3 – False The planning and control cycle could happen within moments or take months. 14. Planning decisions relate to choices about acquiring and using resources to deliver products and services to customers....
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ch01 - CHAPTER 1 ACCOUNTING INFORMATION FOR DECISION MAKING...

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