THE RELEVANCE OF ACCOUNTING INFORMATION IN DECISION-MAKING PROCESS (A CASE STUDY OF UAC NIGERIA PLC)
This research work was carried out to know the Relevance of accounting information in the decision-making process using the United Africa Company (UAC) of Nigeria PLC as a case study. The objective of this study is to examine the usage level of accounting information and to show how accounting information assists in decision making, the purpose, and significance of the study were highlighted, in addition, the limitations and scope of the study were also discussed, research questions raised and hypothesis stated… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Background of the Study
Decision making is a comprehensive process that comprises identifying the problems and decision criteria, allocating weight to those criteria, moves to develop, analyzing and selecting an alternative’ that can resolve the problem, implementing the alternative, and ending with evaluating the decision’s effectiveness. Accounting information relates to the output of the accounting department of an organization it is provided through the collection, analysis, presentation, and interpretation of data and information from another department in terms of monetary values.
Accounting information is a major means of helping managers of organization equity investors of an organization, potential equity investors, creditors, and bondholders of an organization, suppliers, and customers of an organization and another stakeholder to make decisions.
Accounting provides information for three major purposes:
- External Reporting: these reports are used by investors, creditors, government authorities and other outside parties. Routine Internal Reporting: these reports which are periodically generated are used by managers of· the company for their internal decision.
- Non-Routine Internal Reporting: this information or reports are generated to support projects and other decision that comes up as the need arises from them… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Statement of Problems
In a corporate setting, the decision-makers (managers) are generally distinct from the owner of the business enterprise. In like manner, financial managers’ function involves three main types of managerial decisions. One of the financial management decisions is about investment. The financial manager has not been able to evaluate efficiency and effectiveness on the timing and the risk of future cash flows of investment due to inaccurate account ting information on the state of liquidity of the organization… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
The relevance of accounting information as a tool for business decisions cannot be overemphasized. The objectives of this study are stated below:
- To ex-ray and establish that accounting information assist decision making.
- To examine the usage level of accounting information… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
REVIEW OF RELATED LITERATURE
Accounting is often said to be the language of business in the business world to describe the transaction entered into by all kinds of organizations. Accounting terms and ideas are therefore used by people associated with the business whether they are managers, owners, investors, bankers, lawyers, or accountants.
Accounting extends far beyond the actual making of records. Accounting is concerned with more than the record-making phase. In particular, the accountant should be interested in the relationship between the financial results and the events which have created them. He should be studying the various alternatives open to the firm, and be using his accountancy experience in order to aid the management to select the best plan of action for the firm… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Nature and Objectives of Accounting Information
What is information? Information is defined in the dictionary of business and management as “that which is assigned to data by means of the convention used in their representation. Information consists of data that has been retrieved, processed, or otherwise used for informative or inference purpose argument or as a basis for forecasting and decision making.
The encyclopedia of professional management states that information must be distinguished from data and this distinction is important. Data are merely facts and figures that have little to do with decision making, while information, on the other hand, is the essential raw material for decision making.
Accounting is not an end itself but an important information device thereby the optimum objectives are in use of accounting information through analysis and interpretation as a basis for business decision. Its function is to provide quantitative information, primarily financial in nature about economic entities that are intended to be useful in making quantitative choices among competing alternative courses of action that have for reaching consequences the entity concerned.
Accounting is not only an information system design to communicate meaningful economic information about a business firm or an entity to interested parties. It is also a discipline that provides financial and other information. The information which it provides is more so essential for effective planning, controlling, and decision making… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
The Value of Information
Accountants should aim to provide the right information to the right people in the right quantity, at the right time and at minimum cost. This raises the questions as to what is the optimal quantity, content, accuracy, and speed of transmitting the information. These alternatives have different costs and values and it is clear that the accountant should bear this in mind when collecting and presenting the information.
An important factor in vitally all practical decision is the risk and uncertainty involved. This means that it is important that the information supplied by the accountant shows the effect of risk and uncertainty and the range of likely outcomes. Information for decision making must, therefore, be oriented towards the future invariably involves forecasting, estimating, and extrapolation. The information has no value in itself; its value derives from improvements in the decision which are taken upon the information.
Furthermore, accounting information should direct attention to problem areas, thus facilitating the operations of management by exception. It should also be problem-solving, in other future actions, highlighting possible alternative solutions to organizational problems, and aid in the establishment of the best alternative… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Kinds of Accounting Information and Tools for Decision Making
Kinds of accounting information and tools for decision making are the function of the source, utilization, and classes of accounting that are financial management, cost tax accounting, and auditing which deal with the comparative analysis are in terms of:
- Underlying authority
- Purpose of report
- Method of gathering data
- Time – the period covered by the report
- Form of financial report… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Analysis of Financial Statement
The analysis is the resolution of data into their elements or component parts, the tracing of facts to their source, with a view of discovering the general principles underlying individual phenomena. It involves explaining the meaning of given facts and their elucidation and unfolding to show the purpose of these facts. It is the translation of data into intelligible or familiar terms.
The analysis of financial accounts is, therefore, the interpretation, amplification, and translation of facts and data contained in the financial statements the purpose being the drawing of relevant conclusions, therefore, making inferences as to business operations, financial positions, and future prospects. Analysis of financial statements can be horizontal or vertical, internal or external depending on the document being used the sources… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
This chapter discusses the various methods by which data are collected and analyzed in the process of carrying out this research work by research methodology. This means the methods and designs used by the researcher in the collection and analysis of the data. This chapter will expose the design of the study, the population of the study, sampling design and technique, source of data, or others are an instrument for data collection and method of data analysis.
A research design is a plan for a research project which provides guidelines that directs the researcher toward solving the research problems. It is the approach to be used in conducting a specific inquiry. Two basis approaches were used in the study. They are the survey approach and the case study approach.
The survey approach studies both large and small populations by selecting and studying samples chosen from the population to discover the relative incidence and also the distribution and interrelations of variables.
A case study approach was also used to explain the “impact of accounting information” on the decision-making process in which the researcher got their information from some selected manufacturing firms like UAC.
SOURCE OF DATA
The study relied heavily on both primary and secondary source of data
The primary data used in this approach was obtained from a sample drawn from the staff of some selected manufacturing firms. All these were done through the questionnaire distributed, direct observations, and interviews with the staff of the organization. This is directed at achieving a more balanced research result and conclusion… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
RESEARCH FINDINGS AND DISCUSSION
In this chapter, the researcher analyses and interprets the data collected from the respondent through the questionnaire and oral interviews. The questionnaire raised and analyzed in this and issue to the researcher work 133 were raised and issued to the respondents. The presentation and representation of the information will be based on the 133 questionnaires collected below. The analysis would be based on percentage, but the hypothesis would be tested using regression coefficient techniques.
The following are the analysis of the questionnaire distributed and collected by the respondent.
Analysis of Data
The researcher uses a simple percentage technique in analyzing the response to the questionnaire.
Accounting information generated and utilized by an organization is necessary for production decisions and suggested solutions to the problems.
|RESPONDENT||AGREED||DISAGREED||TOTAL||PERCENT AGE OF AGREEMENT||PERCENTAGE OF DISAGREEMENT|
From the table above, respondents agreed that accounting information generated and utilized by an organization is necessary for the production of decisions and suggested solutions to the problem.
Accounting information generated by the accounting department has effectively been applied in the production and decision of the organization.
|RESPONDENT||AGREED||DISAGREED||TOTAL||PERCENTAGE OF AGREEMENT||PERCENTAGE OF DISAGREEMENT|
The information generated by the accounting department has effectively been applied in the production and decision of the organization. From the table above, respondent agreed that accounting… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
SUMMARY OF FINDINGS, CONCLUSION, AND RECOMMENDATIONS
Summary of Findings
The major aim of this research was to find out to what extent do the management of some select manufacturing firm make use of accounting information in the decision-making process. After careful analysis and interpretation of data generated in the course of this research work, the following findings were made in order to confirm the null or alternative hypothesis stated in this study.
Firstly, there is a problem in generating and utilizing accounting information necessary for management decision making processes. Secondly, accounting information generated by the accounts department has contributed to the decision-making process… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
The objectives of the firm differ from one organization to another. Based on the statement of the problem stated in chapter one, the researchers concluded that the application of accounting information makes the difference between failed banks, enterprises, corporate bodies on one side, and the successful one on the other side. For the improvement in the application of accounting information to be sustained, an adequate understanding of the difficulty in the application of accounting information is very essential… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Accounting information is very essential to the users’ for their development, especially when it extends to decision making. In view of the above, the following recommendations were deemed necessary.
- Efforts should be made at employing professional staff with transparent honest ways of performance and also, due punishment should be given to fraudulent
- Seminar/ training should be given to the staff of the accounting department to enable them to specialize more in the field of accounting… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
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