The effect of accounting knowledge on the use of opportunity costs in resource allocation decisions

Document Type : مقالات

Authors

• Farzaneh Nassirzadeh ¹
• Reza Torabi Farsani ²

¹ Assistance professor of accounting in Ferdowsi university of Mashhad

² Master of accounting in Ferdowsi university of Mashhad

https://doi.org/10.22067/pmt.v1i1.2259

Abstract

Information processing theory suggests that knowledge structure in the long-term 
memory is formed as a result of education and affects all mental processes. Based on 
this theory, individuals who have received formal accounting training are expected 
to have accounting knowledge structure stored. Since accounting literature is mostly 
focused on the financial reporting and general accepted accounting principle 
(GAAP), the opportunity costs is normally ignored. The main objective of this study 
is to investigate the relationship between individual accounting knowledge and 
degree of encountering opportunity costs in resource allocation decisions, both 
individually and at professional level. The results of our survey research suggest that 
individuals with high-accounting knowledge pay less attention to opportunity costs 
in resource allocation decisions at professional level in comparison to those of lowaccounting knowledge. The research also indicates that at individual level, there is 
no significant difference between the decisions made by two groups of accountants. 
This study further revealed that considering opportunity costs in resource allocation 
decisions depends, to some extent, on the individuals’ accounting knowledge.

Keywords

• knowledge structure
• opportunity cost
• information processing theory
• cognitive

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