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Introduction To Data - Driven Decision Making Process - AcStat

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16 views18 pages

Introduction To Data - Driven Decision Making Process - AcStat

Uploaded by

Jamaica Manila
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Introduction

to Data- Driven
Decision Making Process
Lesson 1
Desired Learning Outcome
• Define Accounting and Its Decision- making process
• Discuss the importance of data analytics & what does it have to do with
accounting
What is Accounting?
Accounting is the process of
identifying, measuring and
communicating economic
information to permit informed
judgment and decisions by users
of the information
-American Accounting Association (AAA)
Accounting as the art of recording,
classifying & summarizing in a
significant manner & in terms of
money, transactions & events which are
in part at least of financial character
and interpreting the results thereof.
-American Institute of Certified Public Accountants (AICPA)
Accounting as a service activity. Its
function is to provide quantitative
information, primarily financial in
nature, about economic entities, that is
useful in making economic decisions.
-Accounting Standards Council (ASC)
Purpose of Accounting:
To provide information needed by users in making economic decisions

Accounting as the “language of business”


Decision- making in Management Accounting
 Choosing a course of action among alternatives
If there are no alternative, then no decision is required.
 Best decision is the one that involves most revenue or the least amount of
cost.
The process of making decisions is generally
considered to involve the following steps:
1. Identify the various alternatives for a given type decisions
2. Obtain the necessary data to evaluate the various alternatives
3. Analyze and determine the consequences of each alternative
4. Select the alternative that appears to best achieve the desired goals or
objectives
5. Implement the chosen alternative.
6. At an appropriate time, evaluate the result of the decisions against standards or
other desired results.
‘Decision- making is the focal point of
management accounting’
Strategic VS Tactical
Short- run VS Long- run
Strategic decisions
are broad- based, qualitative type of decisions
which include or reflect goals and objectives.
 Based on the subjective thinking of management
concerning goals & objectives.
Tactical decisions
are quantitative, executable decisions which
results directly from strategic decisions.
 Based on the objective thinking of management
concerning goals & objectives.
Short- run VS Long- run Decision Making
Short- run Long- run

• CVP Analysis • Capital Budgeting


• Variance Analysis
• Incremental analysis
Why does data analytics matter to
accountants?
Accountants use data analytics to help
businesses:
 uncover valuable insights within their
financials
Identifyprocess improvements that can
increase efficiency & better manage risk.
“What do the numbers tell us?”

Data Analytics
The true value of data analysis comes not at the point
when the data is compiled, but rather when decisions
are made using insights derived from the data.

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