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The Investment Decision

The success of the investment project depends to a large extent on the


integrity of investment decisions taken at the start of the life of the project, and this
due to the fact that investment decisions are distinct from operational decisions
with a set of characteristics that make them more dangerous.
The decisions investment entails a set of burdens fixed is not easy to modify
or refer them if it turns out not to the safety of these decisions are relatively large
and cash flows associated with these investment projects realized over the long
period of time, which calls for the need to take the problem of change time value of
money into account, the investment decisions entail spend huge sums may require
the project by borrowing huge sums or capital increase, which affects the financial
structure of the facility, and the success of the project in the future investment
decisions taken at the start of the project life, decision to invest is one of the
important decisions and perhaps there is no decision in the business sector the most
important and most dangerous of investment spending resolution.
1. Investment decision
Characteristics of the investment decision
The nature of the investment decisions are connected on credit term. The
investment decisions usually entail the spending of large sums of money, that may
be difficult to recover if the project fails.

The decisions investment represents a risk degree for all the project duration,
especially for the first year. Therefore, the characteristics of these decisions can be
classified as follows:
a) characteristics associated with the temporal dimension;
The interval between the time to spend money for investment decisions and
time to obtain the return of the investment always be relatively longer, comparing
with the results of the decisions for current expenditure.
b) characteristics that relate to nature;
c) characteristics associated with the funding structure.
The most of the investment decisions need to huge amounts, which could
affect the periods of the returns expected from the project.
The results of the investment decision will be used for fixed assets, so it is
necessary to find external sources of financing, such as loans, for the beginning of
the project.
2. Accounting information
The importance of the quality of information has been
recognized at all organizational levels especially among the top
management. The Information quality is the key which determine
success of an organization. Likewise, quality is a critical factor for
achieving competitive advantages among organizations in the
business environment. Therefore, quality of information is the

fundamental factor for making effective decisions especially in the


banking sector.
The Concepts Statements are intended to serve the public
interest by setting the objectives, the qualitative characteristics,
and other the concepts that guides those who are interested to
recognize and measure correctly the economic phenomena by
reference to financial statements.
Accounting information is the compilation of a companys
financial

transactions.

The

companies

present

accounting

information to internal and external business stakeholders for


making decisions. Most companies must present accounting
information according to national accounting standards.
The decision makers vary widely of the types of decisions
which must to make. How investors make decisions depends by
the information they already possess or can obtain from other
resources, and by their ability to process the information. For
information to be useful there must be a link between the
decision makers and the decisions they make. This link is the
quality of the information, that permits users to perceive correctly
its significance.
The general objective of financial reporting is to provide
useful information to present to potential investors, creditors to
help them make investment.

The accounting information should be true and neutral to


some extent. Meanwhile, it should be a true representation to the
financial situations. Reliability of information is necessary for
those who have enough time and experience with respect to
evaluating the trueness of the information content.
In conclusion, the relevance accounting information is
capable to help users to understand the past and present
situations and to form predictions about the future events and
outcomes or to confirm if the prior expectations were correct.