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

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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 organizations 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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This note was uploaded on 04/06/2011 for the course ECON 3332 taught by Professor Craig during the Spring '11 term at Rensselaer Polytechnic Institute.

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

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