Respond to the following: a. What is the decision usefulness approach to accounting theory? b. What are the characteristics and limitations of the decision-model approach? c. What are the characteristics of the decision-maker approach?
What will be an ideal response?
ANSWER:
a. The decision usefulness approach is a contemporary approach to accounting theory that has concentrated on users of accounting reports, their decisions, information needs, and information-processing abilities. This approach has been further dichotomized into decision models and decision-makers.
b. The characteristics of the decision-model approach are:
(1) They are normative and deductive.
(2) Some form of relevance for particular decisions by a particular user group or groups is stressed.
(3) The relevance criterion is instrumental in measuring the selected attributes of assets, liabilities, and income transactions.
Since decision-model approaches are deemed appropriate for communicating extremely relevant information for decision-making, an argument can be made that users must be educated to understand the method.
c. The decision-maker approach is descriptive and inductive. It attempts to find out what information is actually used or desired, the assumption being that the information that is desired should be supplied.
You might also like to view...
One nonprofit organization offers better services than another nonprofit. This is an example of ______ pricing.
A. value-based B. competitive C. cost-oriented D. demand-based
Venue under the FOIA and Privacy Act permits a lawsuit in any of the following
except: a. where the records are located b. where the complainant resides c. the District of Columbia d. where the incident or occurrence that the information pertains to occurred
Which of the following statements is CORRECT?
A. Other things held constant, the higher a firm's days sales outstanding (DSO), the better its credit department. B. If a firm that sells on terms of net 30 changes its policy to 2/10, net 30, and if no change in sales volume occurs, then the firm's DSO will probably increase. C. If a firm sells on terms of 2/10, net 30, and its DSO is 30 days, then the firm probably has some past due accounts. D. If a firm sells on terms of net 60, and if its sales are highly seasonal, with a sharp peak in December, then its DSO as it is typically calculated (with sales per day = Sales for past 12 months/365) would probably be lower in January than in July. E. If a firm changed the credit terms offered to its customers from 2/10, net 30 to 2/10, net 60, then its sales should increase, and this should lead to an increase in sales per day, and that should lead to a decrease in the DSO.
What represents a credit to the investment income account of the balance of payments?
What will be an ideal response?