THE IMPACT OF ACCOUNTING INFORMATION ON BUSINESS DECISION MAKING

ABSTRACT

A clean understanding of managerial functions is very important for the accountant who must provide the necessary information which managers need to perform their functions. In a modern competitive economy the availability of relevant, timely and accurate information especially for planning controlling pricing and other decisions are the immense concerns to modern managers. Accounting provides information for decision making in any organization, information is very vital and indispensable for the success and survival of any organization. The concept of information in organization is more complex and difficult than the frequent use of this common word would suggest. Accounting information which is tool that provides information that can be sued by all non professionals as well as professionals who are willing to sue it properly to form a bank and information requirement in management decision making for a company to ensure and establish its existence, as a going concern it must aim at a food profitability scheme, profit optimization. This can only be achieved through efficient use of accounting information. Hence, this research work is prepared to show the need or ways in which accounting information serve as an aid to banks banking sector in decision making. In order to accomplish this research work, various types of data collection methods were adopted such as distribution of questionnaires, interviews and observations method which were basically adopted for both primary and secondary data. Also table and judgment techniques were used to analyses the data collected to prove the importance of use of accounting information as an aid to managerial decision making in banks banking sector. There was also a test of hypothesis where a decision rule was taken to reject the null hypothesis. In the course of this research, the researcher discovered some problems which militated against effective and efficient performance of banking sector ranged from the interpretation of data information to decision making. However, some recommendations were offered as to improving the supply and use of accounting information in assessing control and performance.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Accounting Information has become an important component of successful business and organizations. Borthick and Clara, (1990) supporting the above, stated that Accounting Information is vital to all organizations either profit or non-profit oriented. They further opined that there is need for every organization to maintain Accounting Information. In the opinion of Wathana, (2004), Accounting Information produces more information to ease operations such as planning and control information and performance evaluation. An understanding of Accounting Information will therefore foster a better understanding of how businesses and organizations are assisted to operate more efficiently and effectively. Accounting Information has to do with any combination of information technology and peoples’ activities that support accounting operations, management and decision making, though in a narrow sense. In a broader sense however, the term Accounting Information is used to refer to the interaction between people, processes, data and technology that are used for accounting duties. It is equally in this wise that O’Brien, (2003) asserted that, the term do not only refer to information and communication technology that an organization uses but also to the way in which people interact with this technology in support of business activities and processes. Furthermore, Accounting Information may be understood from the three words that constitute it (Accounting, Information and System). Wilkinson, (1993) identified three components that relate to accounting as; Information System, Language of Business and Source of Financial Information. Secondly, O’Brien identified information as a valuable data processing that provides a basis for making decisions, taking actions and fulfilling legal obligations. Finally, he stressed that a system is an integrated framework within an entity where the framework is focused on a set objectives. Combining the three, Accounting Information indicates an integrated framework within an entity (such as business entity) that employs physical resources (material, supplies, personnel, equipment, funds) to transform economic data into financial information for conducting the firms’ operations and activities, and providing information concerning the entity to a variety of interested users (O’Brien, 1993). Thomas and Kleiner, (1995) concluded that the combination or interaction between human, technology and techniques knowledge effectively. This research seeks to conduct an empirical analysis of Accounting Information in organizations and examine its values in organizational activities and processes.

1.2 STATEMENT OF THE PROBLEM

Existing literature have shown that Accounting Information when successfully implemented brings about better decision making by managers, more effective internal control systems, enhances the quality of financial reports and facilitates business decision makinges (Wathana, 2010). However, the studies have not shown whether successful implementation of Accounting Information can improve performance measures thereby creating a research gap. Moreover the studies have shown a situation or situations rather in Spanish Enterprises, Chinese Enterprises, Indian Firms etc where economies are well developed. The researchers therefore seeks to bridge the gap so created in the field of Accounting Information and also determine whether the values of Accounting Information identified in earlier studies are applicable to Nigerian situation, a less developed economy.

1.3 OBJECTIVES OF THE STUDY

The following are the objectives of this study:

1. To examine the effect of Accounting Information on business decision making.

2. To examine the effect of Accounting Information on the quality of financial reports.

3. To determine whether Accounting Information leads to effective internal control systems.

1.4 RESEARCH QUESTIONS

1. What is the effect of Accounting Information on business decision making?

2. What is the effect of Accounting Information on the quality of financial reports?

3. Does Accounting Information leads to effective internal control systems?

1.5 HYPOTHESIS

HO: Accounting Information does not facilitate business decision making

HA: Accounting Information does facilitate business decision making

1.6 SIGNIFICANCE OF THE STUDY

This study shall be of immense importance to users of Accounting Information such as financial analysis, Financial Accountants, management Accountants, Finance Managers, the Finance General Managers, Chief Operating Officer, Managing Director and Board of Directors within an organization and the Government Agency, External Auditors and Creditors from outside the organization. This will enable them have effective combination of people, Hardware, software, communication network and data resources that collects, transform and disseminate information in an organization hence the emphasis on computer based Accounting Information. More so, the study shall be of great importance to students of Accounting and Management as well as other researchers who may be acquainted with the basis of Accounting Information, its operations and its support for business activities and processes and hence a guide for further investigations.

1.7 SCOPE/LIMITATIONS OF THE STUDY

This research work is however limited to Accounting Information(AI) as a specialized area in business and non-business applications as used in First Bank, Owerri. Emphasis is more placed on the empirical evidence that exist in the field.

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Item Type: Project Material  |  Size: 77 pages  |  Chapters: 1-5

Format: MS Word  |  Delivery: Within 30Mins.

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