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Page 1
Relevant Costs
Relevant costs and revenues are future amounts that change because of the decision. Sunk costs have already happened and should not drive the choice.
future + changes
Remember
Ignore costs that stay the same.
Accounting Student Book 2 chapters
Study
3 pages
Decision-Making
Reference: Pearson Edexcel International AS / A Level Accounting Student Book 2. Accounting evidence helps compare options, but strong recommendations combine calculations with context and judgement.
What you'll learn
Main skills from this lesson
Use relevant costs and benefits in decisions
Compare options using accounting evidence
Make justified recommendations with limitations
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Page 2
Compare Options
Decision questions often ask whether to accept an order, make or buy, invest, expand or stop an activity. Compare the financial effect of each option.
option A vs option B
Remember
Show the difference, then explain it.
3
Page 3
Recommendation
A recommendation should use numbers, context, risk and non-financial factors. The best accounting answer explains why the chosen option fits the situation.
calculate -> judge
Remember
A calculation supports the answer; it is not the whole answer.
Great work
Continue with quizzes, flashcards, or games when you are ready.