Suggest the three types of decisions that a management accounting information system can support indicating the type of accounting information required to support each decision.

CPA-Quantitative-Analysis-Section-4 BLOCK RELEASE

Management accounting system
This refers to an information system that enables the planning, organizing, and monitoring and control of decisions of the accounting function of an organization to be executed.
Types of decisions that can be supported a management accounting information system and the type of accounting information required to support each decision:

1. Controlling organizational expenditure
Budgeted amounts for an elapsed period and the actual amounts spent during the elapsed period are required to support this type of decision.
2. Investing excess funds
Information on returns on various investment options, which is produced simulation of many business scenarios, is required to support this type of decision.
3. Borrowing funds in order to meet an organization‟s cash needs in periods of insufficient cash flow.
Credit status forecasts produced from simulating the current and future business conditions can support this decision.
4. Acquiring new assets (e.g. IT resources, buildings, etc)
Net present values, internal rate of returns and payback periods are required to support this decision.
5. Disposal of plant assets during a fiscal year
The Net Present Values of the assets at the end of the fiscal year in question could be used to support this type of decision.

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