Question

Which of the following statements about making decisions is correct?

Only relevant financial information should be considered.

All information should be considered in the final decision.

Management should consider both relevant financial and non-financial information.

Management accountants should provide the information, but they should not make recommendations. It is up to the managers to make decisions.

Answer 1

Answer is Management should consider both relevant financial and non –financial information

Decision making is one of the important things in day to day management. For decision making only relevant information should be considered. Relevant information is the information which affects the decision making. For example in accepting a special order variable costs are relevant costs but fixed costs are not relevant. Financial and non financial information both play equal role in decision making. For example relevant non-financial information includes effect on employee morale, impact on brand image, etc