value or information content They should reduce the level of uncertainty

Value or information content they should reduce the

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value or information content They should: reduce the level of uncertainty associated with a problem facing the decision maker influence the behavior of the decision maker in a positive way
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Attributes of Useful Information According to FASB’s Conceptual Framework Relevant Information Relevant Information Predictive Value Predictive Value Feedback Value Feedback Value Timely Timely Neutral Neutral Verifiable Verifiable Reliable Information Reliable Information Representational Faithfulness
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Types of Management Reports Programmed Reports: Scheduled reports are produced at prespecified intervals, such as weekly. On-demand reports are triggered by events, such as inventory levels dropping to a certain level. Ad Hoc Reports - reports designed and created on an “as needed” basis as situations arise that require new information needs.
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Responsibility Accounting implies that every economic event that affects the organization is the responsibility of and can be traced to an individual manager incorporates the fundamental principle that responsibility-area managers are accountable for items that they control
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Setting Financial Goals: Budgeting Budgeting is a process that helps management achieve its financial objectives by establishing measurable goals for each organizational segment. Budget information flows downward and becomes increasingly detailed at each lower level. The performance information flows upward as responsibility reports .
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Responsibility Centers Cost Center - an organizational unit with responsibility for cost management within budgetary limits. Profit Center - an organizational unit with responsibility for both cost control and revenue generation. Investment Center - an organizational unit with the general authority to make a wide range of decisions affecting costs, revenue, and investments in assets.
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Goal Congruence A carefully structured management reporting system and compensation schemes help to appropriately assign authority and responsibility. If compensation measures are not carefully designed, managers may be tempted to engage in actions not optimal for the organization in the long-run.
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Information Overload occurs when a manager receives more information than he or she can assimilate can cause managers to disregard their formal information and rely on informal-- probably inferior--cues to help them make decisions
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