Abstention is the act or instance of deliberately refraining from an action or practice, often seen in the context of voting and decision-making.
An Accountant is a qualified professional responsible for collating, recording, and communicating financial information. They prepare analyses for decision-making purposes and must have passed examinations from recognized accountancy bodies and completed required work experience.
Ad hoc refers to situations, decisions, or committees that are formed for a specific, often temporary, purpose, typically to address a specific issue or problem.
Alternative costs are the costs that would apply if an alternative set of assumptions were adopted, and they represent the benefits foregone when a second-ranked alternative is compared to the chosen alternative.
Analysis refers to the examination and division of a business-related situation or problem into major elements in order to understand the item in question and make appropriate recommendations.
An appraisal is the assessment of alternative courses of action with a view to establishing which action should be taken. Appraisals may be financial, economic, or technical in emphasis.
The Bayesian Approach to Decision Making is a methodology that incorporates new information or data into the decision process. It is especially useful when making decisions for which insufficient empirical estimates are available.
The evaluation of a proposed activity by determining the value of the anticipated benefits compared to the costs incurred, ensuring a financially attractive decision when benefits exceed costs. It’s essential to also consider non-financial factors and the potential disparities in who benefits and bears the costs.
Bounded rationality describes the type of rationality that individuals and organizations utilize when confronted with complex decisions in real-life, fast-moving situations where perfect information is unavailable. Instead of aiming to maximize profits, decision-makers seek acceptable solutions that yield satisfactory results.
Business Intelligence (BI) refers to the technologies, applications, strategies, and practices used for the collection, integration, analysis, and presentation of business information. The primary objective is to support better decision-making within an organization.
Business Intelligence (BI) refers to the strategies and technologies used by enterprises for the data analysis of business information. BI technologies provide historical, current, and predictive views of business operations.
Business Performance Management (BPM) is a framework of metrics that enables companies to analyze and ensure they meet their key performance indicators. This guide explains BPM, its applications, and related concepts.
Carte Blanche refers to the full freedom and authority to act at one's own discretion. It is often used in business contexts to describe a situation where an individual is given the broad authority to make decisions and take actions as they see fit, without requiring additional approval.
The Case-Study Method involves studying information from hypothetical or actual business situations to formulate recommended policies based on given facts. This approach is widely used in business education, notably through Harvard case studies, to gather, organize, evaluate, and generalize relevant data. Analyzing how companies handle real-world occurrences helps determine the effectiveness of management policies and offers improvements when necessary.
Centralization refers to the process or situation where decision-making authority is concentrated within the upper echelons of an organization, as opposed to being distributed among lower-level managers.
A system outlining the hierarchy of authority and decision-making in organizations, where instructions flow downward and accountability flows upward.
Cognitive behavior refers to the ability to judge, reason effectively, and perceive one's surroundings, influencing decision-making and thought processes.
A committee is a group of people appointed for a specific function or task, usually with the goal of making decisions or recommendations. Committees exist in various contexts, such as corporate, governmental, academic, and nonprofit organizations.
Comparison Shopping is the process whereby a consumer gathers as much information as possible about particular products and services for comparison before purchasing them. It involves visiting stores, comparing advertisements, and conducting related research.
A negotiation strategy wherein parties agree to make mutual concessions to reach a consensus or settlement. In management and labor relations, compromise entails both parties yielding some demands to obtain mutually acceptable terms.
Conceptual skills refer to the ability to understand the interrelationship of ideas or elements in relation to the totality. These skills are crucial for strategic thinking, problem-solving, and decision-making in various fields such as management, business, and education.
Core values are the fundamental beliefs or guiding principles of an organization or individual. These values dictate behavior and help in decision-making, setting a foundation for organizational culture and personal conduct.
Corporate modelling involves the use of simulation models to assist the management of an organization in planning and decision-making. A budget is a quintessential example of a corporate model.
The techniques used in collecting, processing, and presenting financial and quantitative data within an organization to ascertain the cost of cost centres and cost units and the various operations.
A cost centre is an area of an organization for which costs are collected for the purposes of cost ascertainment, planning, decision-making, and control.
Cost prediction involves forecasting future cost levels based on historical cost behavior using various statistical techniques, such as linear regression, to inform budgeting, decision-making, and strategic planning.
A corporate philosophy that guides the way a company does business. It encompasses the company's values, mission, and principles, influencing decision-making, behavior, and company culture.
The delegation of decision-making responsibilities to the subunits of an organization. The advantages claimed for decentralization are that local managers are more aware of immediate problems, are better motivated, and have greater control over local circumstances. The disadvantages are the possibility of wasteful competition between subunits, duplication of services, and the loss of central control and access to information.
The act of deciding between alternative courses of action. In the running of a business, accounting information and techniques are used to facilitate decision making, employing models like discounted cash flow, critical-path analysis, marginal costing, and breakeven analysis.
A Decision Support System (DSS) is a computerized information system used to support decision-making activities in an organization, typically integrating various data sources and analytical models to assist in decision-making processes.
A decision table is a tool used to aid decision making by listing problems that require actions, alongside the estimated probabilities of outcomes. When probabilities are hard to estimate, criterions like maximax and maximin are used to choose the most favorable action.
A decision tree is a diagram that illustrates all possible consequences of different decisions at various stages of decision-making, used primarily in decision analysis and machine learning to visualize decision paths.
A Decision Tree is a graphical representation used for making decisions and mapping possible outcomes based on different choices. The tree structure allows for evaluating the impact of decisions and estimating their probabilities and expected values.
Deductive reasoning is a logical method of coming to a conclusion by deducing from established facts what actions to take or what assertions to accept.
In management accounting, the principle that the management of an organization is likely to need different information, and thus different costs, for various activities it carries out, especially when making decisions.
Differential analysis examines the impact on costs and revenues of specific management decisions by focusing on differential (or incremental) cash flows. It considers only those costs or revenues that will change as a result of a specific decision.
Discretion refers to the freedom of a person to make choices within the boundaries of their authority, as well as the quality of being cautious and considerate in what one says or does.
In legal and business contexts, 'elect' means to choose or decide upon a course of action. This may involve selecting options within contracts, wills, business decision-making, or procedural steps in various transactions.
Employee empowerment refers to the practice of giving employees more responsibility and autonomy in decision-making processes within an organization. This approach can lead to improved decision-making, as well as enhanced training, motivation, and productivity among employees.
Empowerment is a form of participative management where employees share management responsibilities, including decision making. It encourages employees to take initiative and make decisions within their areas of responsibility.
An executive is an employee in a top-level management position with major decision-making authority in an organization. Executives are often given incentive pay, such as bonuses, in the private sector.
Executive Information Systems (EIS) are specialized, online strategic management systems that utilize central databases to fulfill organizational information analysis requirements, assisting in strategic decision-making processes.
Expected Monetary Value (EMV) is a statistical technique in risk management used to quantify the potential outcomes of various scenarios based on their probabilities and respective monetary values.
EMV is a critical concept in decision-making, particularly when using decision trees. It involves predicting future monetary outcomes and their likelihood to guide strategic choices.
Expected Value (EV) is a fundamental concept in probability and statistics used in decision making, which represents the average outcome when accounting for all possible scenarios, weighted by their respective probabilities.
Understanding Expert Power and its role in influencing decisions and actions due to specific knowledge, experience, or expertise.
A feasibility study is an analytical process used to determine the viability of a project, venture, or business activity. It assesses various aspects, including financial, technical, legal, and operational factors, to evaluate the potential for successful completion and a satisfactory return on investment.
An integral part of financial analysis, financial modelling involves creating representations of the financial performance of a business or project over time. These models aid in decision-making by simulating different scenarios and outcomes based on historical data and assumptions.
A flowchart is a diagram representing the sequence of logical steps required to solve a problem. It uses conventional symbols to indicate processes and decisions.
Full-cost transfer prices are internal pricing strategies where transfer prices are set based on full cost pricing but do not include a profit margin for the supplying division. This method is widely used but can lead to issues if cost information is inaccurate.
Game Theory is a branch of mathematics and economics that studies strategic interactions where the outcomes depend on the actions of multiple agents, each aiming to maximize their own payoff.
Goal programming is a form of linear programming that allows for consideration of multiple, potentially conflicting goals in decision-making processes.
Human Information Processing (HIP) refers to the cognitive processes involved in thinking, remembering, interpreting, and making decisions. Understanding HIP is important for accountants as it provides insights into how people use information in decision-making, which can inform the selection of the most appropriate information and formats for financial reporting.
Human relations skills are management skills that facilitate effective interactions with personnel. These skills include leadership, communication, decision-making, negotiation, counseling, and conceptual skills.
Hypothesis testing is a statistical procedure that involves making a formal decision about whether a statement (hypothesis) about a population parameter should be accepted or rejected based on sample data.
Incremental analysis, also known as differential analysis, is a decision-making tool used in business and accounting to assess the financial implications of different choices by focusing on relevant revenues and costs.
Inferred Authority is a type of authority assumed by an individual when a higher authority leaves their post, often exercised due to inferred abilities or circumstances requiring immediate leadership.
Leading measures are predictive indicators that precede an outcome or result, typically used to forecast future performance and guide decision-making processes. These metrics enable organizations to take proactive actions to achieve desired results.
A constraint in budgetary control and decision making that prevents an organization from achieving higher levels of performance and profitability.
Line authority refers to the power granted to supervisors or managers over their subordinates within an organization. This authority enables direct control over important operations and decision-making processes.
Linear Programming (LP) is a mathematical method for determining a way to achieve the best outcome in a given mathematical model for decisions with numerous alternatives. LP is often used in business, economics, and engineering to maximize profit or minimize costs in processes with varying levels of inputs.
The term 'majority' can refer to more than half of a group, especially in voting contexts, or the age at which a person is considered legally independent and responsible for their actions.
Management involves the combined fields of policy and administration, as well as the people who provide the decisions and supervision necessary to implement the owners' business objectives and achieve stability and growth.
Management accounting involves techniques used to collect, process, and present financial and quantitative data within an organization to aid in performance measurement, cost control, planning, pricing, and decision making. The Chartered Institute of Management Accountants (CIMA) is the major professional body for management accountants in the UK.
Management by Exception is a management principle where decisions that cannot be handled at one level are escalated to higher levels. It is also used in budgetary control to focus on significant variances, leaving small variances without intervention.
A Management Information System (MIS) is a structured system providing comprehensive organizational information to management for decision making in areas such as control, operations, and planning. It relies heavily on a robust data management system, including a database that assists in accurate and rapid decision-making.
A Management Information System (MIS) is an organized approach to gathering critical data and information, which supports decision-making processes within an organization. MIS integrates technology, people, and business processes to facilitate efficient management operations.
Management Science pertains to the study of management with a focus on using mathematics and statistics to resolve production and operations problems. It provides management with a quantitative basis for decision-making.
A manager is a person responsible for administering and directing an organization's activities to achieve its goals efficiently and effectively.
Managerial accounting is the practice of using financial accounting records as basic data to enable better business planning and decision-making. It is designed to aid in decision-making, planning, and control within a business organization.
A costing and decision-making technique that charges only the marginal costs to the cost units and treats the fixed costs as a lump sum, deducting from the total contribution to obtain the profit or loss for the period.
A Marketing Information System (MIS) is a structured approach that facilitates the systematic collection, analysis, and distribution of marketing data. This system enables marketing managers to make informed decisions.
Materiality is an important accounting principle determining the significance of financial information and its impact on decision-making. This concept is essential for accurate financial reporting and is influenced by the size, nature, and circumstances of an item.
The Minimax Principle is a decision criterion aimed at minimizing the maximum possible loss or regret. It involves selecting the outcome with the smallest potential loss, thereby aiming to achieve the least amount of regret in case of failure.
NIFO cost is a method of valuing units of raw material or finished goods issued from stock by using the next unit price at which a consignment will be received for pricing the issues.
In slang, a no-brainer refers to a decision-making scenario where the correct choice is so obvious it requires no thought.
An objective function in linear programming is a mathematical statement that defines the goal of a decision-making problem, often aiming to maximize contribution or minimize costs based on the relationship between production factors.
Operations Research (OR) is a discipline that deals with the application of advanced analytical methods to help make better decisions. It involves the development and use of mathematical models to improve understanding and manage large-scale systems.
Opportunity cost is the economic cost of an action measured in terms of the benefit foregone by not choosing the next best alternative. It plays a critical role in decision-making by considering the returns that could have been earned through alternative investments or actions.
OPT, short for 'decide or make a choice,' is a term used in decision-making processes where an individual or entity selects one alternative over another. For example, an individual may opt to lease rather than purchase facilities.
Organizational Behavior is an academic field of study concerned with human behavior in organizations. It encompasses topics such as motivation, group dynamics, leadership, organization structure, decision making, careers, conflict resolution, and organizational development.
Out-of-pocket costs refer to the additional expenses that a company or individual will have to pay as a direct result of a specific business decision. These costs can play a crucial role in decision-making, especially in scenarios where cash resources are limited.
A formal procedure followed in the conduct of any meeting, usually adhering to Robert's Rules of Order. It ensures the orderly and efficient management of the meeting's agenda.
Participative leadership, also known as consultative management, encourages team member participation in decision-making, fostering a collaborative and inclusive work environment.
An open form of management where employees have a strong decision-making role. Developed by managers seeking a cooperative relationship with their employees, participative management aims to increase productivity, improve quality, and reduce costs.
PPBS is a comprehensive management framework used by organizations to integrate planning, programming, and budgeting processes to align resources with objectives and facilitate better decision-making.
Probability is the likelihood that a particular outcome will occur, quantified on a scale from 0 (indicating certainty that it will not occur) to 1 (indicating certainty that it will occur). It is a key concept in decision-making models, often subjective in nature.
Strategic advantages and disadvantages regarding a particular situation. For example, the pros and cons of launching a new product at a particular time have to be weighed in terms of competitive and other market factors.
Prudence involves displaying foresight, caution, and discretion in one's actions. It implies being careful, measured, and avoiding careless or reckless behavior.
Rational expectations refer to the hypothesis in economics that individuals make decisions based on their best available information, forecasting future economic variables as accurately as possible.
The principle that financial information must influence decisions, offering predictive value or confirmation/correction of prior expectations. This concept is vital in both financial reporting and decision-making, encompassing relevant cost and relevant income.
Relevant costs are expected future costs that vary with different courses of action a manager might take, making them essential for effective decision-making.
Relevant income, also known as relevant revenue, refers to the revenue that changes as a result of a proposed business decision. Revenues that remain unchanged by the decision are considered irrelevant to the decision-making process.
Risk vs. Reward is a financial concept that attempts to compare the potential fluctuations, especially the downside, with potential benefits to determine whether the proposed investment or cost is worthwhile.
Robert's Rules of Order are a set of parliamentary procedures designed to facilitate the smooth functioning of meetings by ensuring proper decorum, maintaining order, and providing a clear framework for decision-making processes.
Sagacity refers to the characteristics of intelligence, shrewdness, or wisdom; soundness of judgment. It emphasizes the ability to make good decisions, often with keen perception and foresight.
A method used in decision making to evaluate the impact of variations in key variables on projected outcomes, helping to identify the degree of risk associated with a decision.
Sensitivity Analysis is a financial modeling tool used to predict the outcome of a decision given a certain range of variables.
The shadow price represents the change in the optimal value of the objective function for a linear programming problem per unit increase in the right-hand side of a constraint.
Consumer products that require considerable time, concentration, and research to make an informed judgment about their relative merits and price.
