A STUDY ON THE ADOPTION OF ACCOUNTING INFORMATION AS THE MAJOR TOOL FOR DECISION MAKING
- Project Research
- 1-5 Chapters
- Quantitative
- Chi-Square
- Abstract : Available
- Table of Content: Available
- Reference Style: APA
- Recommended for : Student Researchers
- NGN 3000
BACKGROUND OF THE STUDY
Almost every business worked toward achieving its intended, planned, and overall goals. Every company, especially small businesses, strives for efficiency and proper effectiveness, and the quality of accessible accounting information and how the information is used by the organization play a big role in achieving these goals (Fatai, 2011). However, as defined by Coster et al (1978), information is the lifeblood of every business, so for any business to succeed in today's rapidly changing environment, management must keep up to date with all current and relevant information that will help them achieve their predetermined goals, or risk stagnation. The manager who is making a choice usually wants to be sure that he or she has all of the facts (Joshua, 2008). This is only feasible with a successful presentation and its application in the right conditions (Coster et al, 1978). When considering the value and use of accounting information to management, particularly in small businesses, it is important to note that management also makes decisions based on other data. Engineers, Lawyers, Doctors, Architects, and other corporate officials provide valuable information; nonetheless, accountants' knowledge is critical in identifying a firm's assets and liabilities, as well as in pricing its goods and determining when profits or losses are realized. Accounting data is used to track the growth of a business and to make decisions about the course of action to take out of a number of different and unconnected options (Joshua, 2008). Although it has been noticed that decision making is the final step in the managerial process, the relevance of a management choice is dependent on the quality and relevance of accounting data provided by the accountant. Accounting information is critical to the decision system when it comes to business and economic concerns since it offers quantitative information for three functions: planning, control, and assessment (Onugu, 2005). Setting a goal, identifying various means of achieving the objective, and determining which alternative is the best course of action are all part of the planning process (Bush, 2010). Control is the process of ensuring that plans are carried out as intended. To put it another way, do plans match up with actions? At this stage, the accountant may be requested to provide information on actual expenses as opposed to previously projected expenditures.
- As part of the evaluation process, the entire decision system is studied in order to enhance it. Was the intended purpose (getting the Fed back) met? If not, it might be due to inadequate planning, lack of control, or the selection of the incorrect aim.
Managers' primary task is to make decisions, and the quality of these decisions impacts the organization's success and survival (TURBMAN & LOOMBA 1976) | Nothing is more vital to management for decision-making than timely, objectively summarized accounting information that directs attention to issue areas. As a result, "all judgments are relied on information to a considerable extent, and the quality of management decisions will be a reflection of the quality of accounting and other information received" (GARRISON 1982) Important accounting tasks, such as the presenting of weekly, monthly, or quarterly accounts, may be included in accounting information (Onugu, 2005). A trading and profit and loss account displaying numbers for the period in question and the year to date, as well as a balance sheet, may be included in these regular accounts. The regular work include assisting management in the planning and forecasting of future outcomes. Budgeting is the term for the procedure, which is often referred to as budgetary control (Fatai, 2011). Other consumers of accounting information or reports, aside from management, should be included, such as shareholders who are interested in their capital investment, the government who is truly interested in profit to assist them define task and other policies, and so on. The creditors, who are genuinely concerned about the organization's creditworthiness, Employees may see a solid profit or constant growth or increase in profit as a signal to demand greater bonus. Finally, the society in which the neighborhood is located desires to be employed and has needed facilities as a result of the firm's impact.
"Accounting information is thus, data arranged for the specific aim of decision making (OSISIOMA, 1996)," says the author.
Indeed, the researcher agrees with Garrison's words from 1982: thus! The summaries derived from the accounting records are of particular significance to the management, and it is on them that he or she depends."
1.2 STATEMENT OF PROBLEMS
The three applications of accounting information management, according to Garrison in 1982, are to lead day-to-day operations, plan efficiently and concentrate attention on deviations from plans, and arrive at the best solution to the organization's operational difficulties.
Hypothetically, the question remains as to why management has not been able to give accounting information the attention it deserves.
It is regrettable that a delay in accounting information sharing by accountants management might jeopardize a manager's work and the faith placed in management by shareholders (Fatai, 2011). The incapacity of management to see accounting data as critical to life must be investigated and appreciated attention made to re-orienting management. Accounting data is one of the most significant tools (Onugu, 2005).
The researcher is curious in some of the findings about how accounting data effects management decision-making. Is it relied on by external management, or are all decisions based on accounting data? What does it mean and how is it communicated to management?
Hypothetically, the researcher will divulge certain small-scale industry decisions and determine whether accounting knowledge impacts those decisions, and if so, to what amount.
1.3 OBJECTIVE OF THE STUDY
The purpose of study are as follows
- The study will require and examine the various decision areas in the organizations which normally accounting information is supplied in small scale industries in Enugu State.
- The researcher will determine to what extent management really relies on these accounting information in taking those decision.
- Re – orienting management to various types of accounting information available and persuading them to seeing accounting as a single tool to determine profitability, asset base, liability, cost of production and price to fix their products.
1.4 SIGNIFICANCE OF STUDY
The relevance of this study will go a long way toward informing all members of managerial groups about the importance of accounting data, i.e., recognizing accounting as a tool that cannot be ignored and a cornerstone of management decision-making.
It motivates some people to pursue careers in accounting. They must be able to comprehend the data that is accessible to them. To raise understanding of how accounting data operates efficiently and effectively. More study is encouraged, especially since that information technology is taking over the world.
1.5 SCOPE AND LIMITATIONS.
The researcher now find out that modern accountant, therefore, is concerned not only with record keeping but focuses on the ultimate needs of those who use accounting information, whether these users are inside or outside the business itself. So accounting is not an end in itself. Instead it is an information system that measures, processes and communicates financial information about an identifiable economic entity.
This project intends how accounting information helps management in taking decision as regards the profitability of its products, it fixes its products prices, cots of manufacturing its assets and liabilities and then in the opinion of the researcher Enugu state only will be an enough sample space for the researcher to consider.
The researcher will be limited to produce an intensive project and better work by the following:
- The limited time available for the academic exercise which poses a serious disturbing thereat though it will be overcome
- In most cases, management is not on seats and entails that the researcher will be on the more always in trying to collate the required data from the management involved. Some when they are around may shy away from disclosing their mode of operation.
- Finance is in fact on of the limitation but above all, the joy in writing sustain one from the obstacles.
1.6 STATEMENT OF HYPOTHESIS
H0 The use of accounting information has not enhanced pricing strategies in small scale industries
H1 The use of accounting information has enhanced pricing strategies in small scale industries
H0 Management does not rely on accounting information for its numerous decisions
H1 Management rely on accounting information for its numerous decisions.
1.7 DEFINITION OF TERMS
Accounting is the basis used to provide quantitative information, primarily financial in nature about economic entities that is intended to be useful in making economic decision.
Accounting information as a tool and like most tools, cannot be of much direct help to those who are unable or unwilling to use or misuse it.
Communication network is the channel through which the information system is presented to the management for decision making and other interested publics
Decision – A decision is a choice of alternative and means by which to move towards an objectives
Financial Accounting is a type of information reported to and used those outside the organization.
Management is the group of people in a business with overall responsibility for achieving the company’s goals
Small – scale enterprises according top Okoye in “Pioneer Accounting” first edition, he defines it thus “The small scale enterprise is an economic enterprise with a founder who are the major interest shareholder with the enterprises, share distributed amongst children and relations of the organization”
Price – is money consideration received, given or received to effect a scale of goods and services.
Incentive share is the monetary boosting items and on monetary which management introduces to improve on the working condition of the workers so that he will contribute more in his work place.
Routine is the way by which the accounting information should be used regularly fro decision making
Budgetary tool is the total process of developing plans for a company’s anticipated operations and controlling operations to aid in accomplishing those plans.
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