Relevant Information (Decisions) - Managerial Accounting

The video tutorial discusses the importance of using relevant information in decision-making. Relevant information is directly related to the decision, impacts the future, and differs between alternatives. An example of choosing between two apartments is used to illustrate how factors like location, number of bedrooms, square footage, and pet policies can be relevant or irrelevant depending on the context. The tutorial emphasizes that past information is not useful for future decisions and highlights the importance of context in determining relevance.

What is a key characteristic of relevant information in decision-making?

• It is always based on past data.

• It is directly related to the decision at hand.

• It is the same for all alternatives.

• It is unrelated to future outcomes.

In the apartment example, why is the number of bedrooms considered relevant?

• Because both apartments have the same number of bedrooms.

• Because there is a difference in the number of bedrooms.

• Because it is unrelated to future living conditions.

• Because it is not a factor in decision-making.

Why is the square footage of an apartment considered relevant?

• Because it affects future living space.

• Because it is related to past decisions.

• Because it is the same for both apartments.

• Because it is not a factor in decision-making.

How does pet-friendliness affect the relevance of information in the apartment example?

• It is always irrelevant regardless of pet ownership.

• It is relevant only if you are a pet owner.

• It is relevant only if you are not a pet owner.

• It is irrelevant because both apartments allow pets.

Why is the monthly rent considered relevant information?

• Because it is the same for both apartments.

• Because it affects future financial commitments.

• Because it is a past expense.

• Because it is unrelated to decision-making.