Exam 1: The Role of Accounting Information in Management Decision Making

Activities in the value chain are classified as value-added or non-value-added in many organisations.

Accounting information cannot be used to motivate employee behavior.

A vision statement is one way to clarify an organisation's basic purpose and ideology.

Incremental cash flows are relevant for decision making.

An organisation's value chain can incorporate its I Own customers II Own suppliers III Customers' customers IV Suppliers' suppliers

Organisational core competencies can include

Which of the following is least likely to be an external report?

Which of the following statements about open-ended problems is true?

Accounting information is the only thing managers need to make financial decisions.

The owner of a local restaurant is deciding whether to lease a company van. If the van is leased, the company would avoid paying its vendors to deliver the supplies and food purchases. The owner has negotiated a potential lease contract that would require a down payment plus a flat monthly rental payment. At the end of each year, an additional "contingency" rental payment would be required if the total number of kilometres driven exceeds 8,000. The owner has estimated that the van will be driven 600 kilometres per month for picking up supplies and food purchases, so she does not expect to incur a contingency annual payment. Based on these kilometres, the owner has calculated the expected amount of cost for fuel, repairs, and maintenance. She has received a quote from her insurance company for the next six months' insurance. She plans to hire a part-time employee at $10 per hour to drive the van. The employee will work a flexible schedule based on the deliveries required. Items 1 through 7 are relevant costs for this decision. Indicate whether the dollar amount of each relevant cost is most likely C certain or U uncertain. Each item has only one correct response. 1 Lease down payment 2 Monthly lease rental payments 3 Contingency annual payment 4 Fuel, repairs, and maintenance 5 Van insurance for the next six months 6 Part-time employee wages 7 Reduction in vendor delivery charges

Which of the following statement about biases is true?

Higher quality decision making processes are less

A value chain is the sequence of business processes in which

Choosing and implementing a solution to a business problem includes I Making trade-offs among alternatives II Considering the organisation's strategies III Motivating performance within the organisation

Virgin Airlines flies several non-stop flights daily between Brisbane and Melbourne. Which of the following is an uncertainty associated with this operation?

Higher quality reports are more I Relevant II Understandable III Available

Uncertainties cause decision makers to ignore weaknesses in a preferred course of action.

Analysing the strengths and weaknesses of different alternatives includes all of the following except

Accounting information I Can be used to guide organisational vision II Is a core competency for most companies III Can be used to motivate performance

Because we can never completely remove biases and uncertainty from decision making, higher quality decision processes are often imprecise.