In Accounting, What Is a Decision Rule?

Management accounting principles are the main norms that guide the practice of management accounting. Management accounting decision principles are one of the main contents of management accounting principles.

Accounting decision principles

It is the main norm to guide management accounting practice. The principle of management accounting decision-making is one of the main contents of management accounting principles.

Share-making is an organizational form of the enterprise system, and it is the product of the marketization of the economic system. The operation of this organizational form includes internal organization activities centered on production and external organization activities centered on signing and executing contracts. The formation of enterprise investment decisions belongs to internal organizational activities, but it has connections with external organizational activities. It is this internal and external activities that collectively affect the formation of enterprise investment decision principles. The prescriptive nature of investment decision principles for joint-stock enterprises mainly includes the following levels:

1. The economic operation mode is the institutional background formed by the investment decision principles of joint-stock enterprises. From the perspective of the economic operation model, the marketization of economic operation has formed different types of investment subjects. Diversified investment subjects take the form of decentralized investment decisions. The shareholding system itself is a form of corporate organization in which many investors participate in investment. Refining this problem can be understood from two aspects. On the one hand, from the perspective of property rights, the shareholding system basically solves the vacancy of property rights. Every investor's participation in investment decisions is related to the property rights that he owns. Individual ownership of property rights is conferred by the operating model of the market economy. On the other hand, the operation of the market economy requires decentralized investment decisions. In fact, it has created conditions for the joint-stock enterprises to adopt decentralized decision-making principles.

2. The investment decision principle is based on the decentralized ownership structure, and every investor has the right to participate in investment decisions. Equity is the evidence carrier that investors own the property rights of enterprises on laws and regulations. Because the shareholding of a joint-stock company is scattered among many investors, the investment decision principles of the company must be formed by the participation of all investors; that is, every investor has the right to participate in the investment decision of the company. This situation shows that the investment decision principles of joint-stock enterprises are largely constitutional in nature, and the process is completed by investors voting in favor of or against investment decision-making proposals. Therefore, joint-stock enterprises generally adopt voting approval Decision principles. The key here is not whether the voting has reached a complete consensus, but rather the participation of investors in investment decisions. However, in the case of equity monopoly, the principle of voting consent will be distorted, and this issue will be discussed below.

3. Subjective risk is a form of bearing the risk of investment decision-making in joint-stock enterprises. Different principles of enterprise investment decision-making will lead to different forms of risk-taking. For example, under the planning system, enterprises take administrative intervention-type investment decision principles, and their risk-taking form is an overall risk without specific individual commitments. As mentioned above, the reason why joint-stock companies adopt the voting consent system is that each investment participant is a representative of the company's assets or property rights. The effectiveness of investment decisions is directly related to the assets or property rights they own. Appreciation or shrinkage, that is, they are the actual bearers of investment decision-making risks, and the risks they take are a subjective risk. Strictly speaking, risk-taking is a constraint mechanism for investment decisions, which together with the principles, mechanisms, procedures, etc. of investment decisions constitutes an investment decision-making arrangement system.