Two advantages of using financial accounting information in decision making are :
(i) Financial accounting provides an insight into the financial viability of the Company. Hence,
based on the fund position, the decision can be correctly taken.
(ii) Further, the financial accounting makes calculation of ratios easier, which can lead to a
correct decision regarding the long term or short term profitability of the decision to be taken, as
the case may be.
Two disadvantages thereagainst are :
(i) Financial accounting, if not done in accordance with the Generally Accepted Accounting
Principles, can lead to a wrong picture being shown. This can affect the purchase power for a
decision to be taken correctly.
(ii) In major cases of decision making, budgets are also required to be analysed. This information
is not provided for by financial accounting, but by management accounting.
Solution
Two advantages of using financial accounting information in decision making are :
(i) Financial accounting provides an insight into the financial viability of the Company. Hence,
based on the fund position, the decision can be correctly taken.
(ii) Further, the financial accounting makes calculation of ratios easier, which can lead to a
correct decision regarding the long term or short term profitability of the decision to be taken, as
the case may be.
Two disadvantages thereagainst are :
(i) Financial accounting, if not done in accordance with the Generally Accepted Accounting
Principles, can lead to a wrong picture being shown. This can affect the purchase power for a
decision to be taken correctly.
(ii) In major cases of decision making, budgets are also required to be analysed. This information
is not provided for by financial accounting, but by management accounting..
Two advantages of using financial accounting information in decision.pdf
1. Two advantages of using financial accounting information in decision making are :
(i) Financial accounting provides an insight into the financial viability of the Company. Hence,
based on the fund position, the decision can be correctly taken.
(ii) Further, the financial accounting makes calculation of ratios easier, which can lead to a
correct decision regarding the long term or short term profitability of the decision to be taken, as
the case may be.
Two disadvantages thereagainst are :
(i) Financial accounting, if not done in accordance with the Generally Accepted Accounting
Principles, can lead to a wrong picture being shown. This can affect the purchase power for a
decision to be taken correctly.
(ii) In major cases of decision making, budgets are also required to be analysed. This information
is not provided for by financial accounting, but by management accounting.
Solution
Two advantages of using financial accounting information in decision making are :
(i) Financial accounting provides an insight into the financial viability of the Company. Hence,
based on the fund position, the decision can be correctly taken.
(ii) Further, the financial accounting makes calculation of ratios easier, which can lead to a
correct decision regarding the long term or short term profitability of the decision to be taken, as
the case may be.
Two disadvantages thereagainst are :
(i) Financial accounting, if not done in accordance with the Generally Accepted Accounting
Principles, can lead to a wrong picture being shown. This can affect the purchase power for a
decision to be taken correctly.
(ii) In major cases of decision making, budgets are also required to be analysed. This information
is not provided for by financial accounting, but by management accounting.
