25-1RQ - Horngren'S Financial And Managerial Accounting

Question

List the four steps in short-term decision making. At which step are managerial accountants most involved?

Step-by-Step Solution

Answer

The managerial accountants are involved during the time of collecting the appropriate information which are processed for the decision-making purposes. 

 

Definition of Managerial Accounting

Managerial accounting is that branch of accounting that collects and communicates internal information with the managers for strategies, policy development, and decision-making.

Steps in making short-term decisions

The following steps are involved in making short-term decisions:  

1. The initial step of the decision-making process is the assessment of business goals that are to be achieved by the business entity.
2. After the identification of business goals, associated course of action and alternatives are ascertained by the administration that suits  the business operations.
3. The collection of relevant information linked with the business goals’ accomplishment process, is another step of short-term decision making.
4. In the end, the best useful alternative is chosen by the managers and implemented to accomplish the predetermined goals. 

 

The involvement of managerial accountants is  most in the third step, i.e., at the time of gathering the relevant data for drafting effective and efficient decisions.