What is the rule of decision -making in accounting?

The rule of decision -making is a guide for decision -making, which is designed to ensure that the accounting decisions are consistent, efficient and in accordance with the principles of business. There are a number of standardized rules of decision -making that companies and individuals can accept, and it is also possible to develop a rule of decision -making from scratch for a particular society or situation. These rules are part of the principles and procedures that provide instructions for a number of business activities.

There are two aspects of the rule of decision -making. The first is a description of the hypothetical set of conditions. The second is the Directive on the action to be adopted under these conditions. For example, the company can use the net current value to evaluate potential investments. Under this decision -making rule, the company would determine the difference between the initial investment costs and the current value of the investment and if the difference is positive, the investment would be accepted.

<

The decision -making rule cannot break the law and should not pIrend the admitted accounting standards and practices unless there is a very convincing reason. The use of the rules of decision -making requires a majority of estimation in decision -making, which may be beneficial, and also provides people with a fixed section that is deciding on business activities. This allows people to look more objectively, reducing the risk of adopting a bad decision.

Many rules of decision -making revolve around hard numbers and support documentation that are needed to decide on business. These rules can be used for internal decisions, external investments and related activities. It is generally acknowledged that companies considering activities such as investments will have to be able to see the numbers to decide; The company will not approach the investment without accessing information that can be used to make an informed selection.

to decide can existo tie other factors. For example, if the company uses a net present method and investment seems to be acceptable according to this method, the company can still refuse to accept the investment. For example, an investment may contradict the company's statement, or it could be an investment in something that will be prohibited or more strongly regulated, which means that it could quickly lose value after obtaining, making it a poor choice of investment.