E7-1 As a study aid, your classmate Pascal Adams has prepared the following list of statements about decision-making and incremental analysis.

1. The first step in managements decision-making process is, Determine and evaluate courses of action.

2. The final step in managements decision-making process is to actually make the decision.

3. Accountings contribution to managements decision-making process occurs primarily in evaluating possible courses of action and in reviewing results.

4. In making business decisions, management ordinarily considers only financial information because it is objectively determined.

5. Decisions involve a choice among alternative courses of action.

6. The process used to identify the financial data that change under alternative courses of action is called incremental analysis.

7. Cost that are the same under all alternative courses of action sometimes affect the decision.

8. When using incremental analysis, some cost will always change under alternative courses of action, but revenues will not.

9. Variable cost will change under alternative courses of action, but fixed cost will not.

Instructions

Identify each statement as true or false. If false, indicate how to correct the statement.