1.1 BACKGROUND OF THE STUDY
The owner of a business naturally wishes to run his business as efficiently as possible. One of the coordinal purposes of keeping accounts is to enable him to do this. His accounts should tell him the exact cost of what he is selling, the exact amount of each expense which is involved and the exact revenue of the business.
With such information, the owner of the business can make comparison from year to year. Comparing the profit this year with the preceding years and investigate the causes of any difference. This is, by making comparison of the expense incurred.
By studying his accounts in this manner, the business manager can now formulate a business policy. He may, for instance take a discussion whether to rise or lower prices of his products; to embark on advertisement or not. To change the method of production or to change the organizational structure.
To ordinary man in the street, Account means story, explanation, or report of money received and spent.
In the remote past, the actual record – making is called “Book-Keeping”. However, accounting today extends beyond book-keeping.
According is a discipline concerned with the recording, analysis, and forecasting of income and wealth of business and other terms, the flow of economics values between or within economic entities.
According to (Wood’s 1982), “accounting is said to be the language of business”. At a given time, Accounting made it possible for a businessman to discover;
The value of his in-put and out-put
The available cash/bank balance
His debtors and creditors
Value of Assets
Whether profit or loss
The financial position of the business.
According to (White Head 1979), “Accounting is the art of controlling a business by keeping accurate book keeping records, preparing from those records certain statistics called accounting ratios, using those ratios to dictate financial difficulties before they become serious, so that counter measure may be taken”
However, it is necessary to review the definition of the objective of accounting in line with the present role expected of accounting discipline. The main purpose of accounting centred on the provision of potentially useful information for making economic decision that capable of enhancing social welfare.
It is the duty of management to ensure that owners wealth are safeguard from theft, embezzlement and also report on the periodic result of owner’s business.
Financial Accounting is confined to preparation of financial statement for the use of outsiders like debenture holders, creditors, banks, and also for the information of shareholders, to show the manner in which the business operation are conducted during the specific period.
According to Osisioma (1975), “accounting is a way to give management the financial information and controls it needs to run a profitable business or an efficient organization”. It is a system of principles and techniques that permits the recording, classification accumulation, presentation, and interpretation of financial information so that pass performance, present condition and future planning can be evaluated. The best form of comparison involves the use of carefully assessed standard of the results, which ought to be achieved correctly.
Financial accounting involves in furnishing of information to outsiders who have the right to get the same under certain well defined and accepted principles and rules.
Management is the process of procuring, combing, utilizing or allocating an organizational in-puts-men, material and money 3M, by planning, organizing, directing and controlling for the purpose of achieving the objective of a business.
Management accounting therefore is an integral part of management that concerned with identifying; presenting, and interpreting, information required by management of all levels for decision making.
These concerns with data gathering analyzing processing, interpreting and communicating the resulting information for use within the operation so that management can more effectively plan, making decisions and control operations.
Managing a business is a matter of decision what should be done, seeing to it that the means employed in the business to do it.
Decision-making is one of the main functions of management, therefore, provision of vital information needed to asset all levels of management in planning and controlling the activities of commercial enterprise.
Cost Accounting provides information for both management accounting and financial accounting; It measures and reports information that relates to the cost of acquiring or consuming resources by an organization.
According to institute of cost and management (IMA) defined cost accounting as the “application of accounting and principles, methods and techniques in the ascertainment of cost and the analysis of savings and/or excess as compared with previous experience or with standard”.
Cost accounting provides management with information about cost of material, unit cost, production cost. Whether to produce or sell product ‘A’, should a particular product be made or bought. The effect (financially) increment or reduction in in-put (variable costs). All these call for decision-making which lies on accounting information.
Social Responsibility Accounting
This involved with the consideration of the social effects of business decision as well as their economic effects on the society as a whole.
Accounting data is vital tool for all these responsible for taking decision in our business organization. It is immaterial whether the business in question is a private or public venture. The scale of operation does not matter also. However, the tool becomes increasingly relevant as the manager’s responsibilities broaden with business expansion and complexity.
Proper accounting is in no doubt enhances effective management decision-making. Money accounting ideas and data help the management in performing its functions.
This study concentrates on the proper accounting information in management decision-making in public liability companies especially Alo-Aluminium Company Enugu.
Every establishment has its peculiar structure and its designed duties for the customers. In view of this therefore, proper accountability is required for the coverall growth of the business.
The major role of accounting be it government or private is to provide useful information for assessing management’s performance and stewardship.
However, there some questions which the managers or owners of the business would like to know –
Whether or not the business is operating at a profit or not.
Whether or not the business will be able to meet its obligations as they fall due. Related laws and regulations were followed.
The above questions required positive answers. Some companies in spite of availability of 3m (Labour, Materials and money) still performed below the expectation. The reasons for their failure include lack of effective management information and improper accounting records in the business operation.
In summary, the kind of information which account provide is useful to both managers, owners, investors, bankers, lawyers, even to the house wires who practice door to door petty businesses.
1.2 STATEMENT OF THE PROBLEM
These include: -
1. Improper accounting records and report to the public on the financial position of an organization.
2. Improper execution of accounting information in an organization.
3. The primitive system of accounting.
4. Inability to ascertain the financial position of organization.
5. Improper guide to future policy.
1.3 PURPOSE OF THE STUDY
Based on the above problem defined, the following are the objectives.
1. To find out the proper ways of recording and reporting the financial position of an organization to the public.
2. To establish the accounting information properly in an organization
3. To ascertain the modern system of accounting
4. To find the performance of an organization in terms of profitability or solvency.
5. To determine what future will look like.
1.4 SCOPE OF THE STUDY
In this study, the scope on the proper accounting information as tool for management decision-making is control on Alo-Aluminium Ltd, Enugu base.
1.5 RESEARCHER QUESTIONS
To what extent will proper accounting record and reports be helpful to the public to know the financial position of an organization?
How does modern system of accounting information helps in an organization?
1. To what extent does accounting helps planning and control in an organization?
2. To what extent does account data play in the performance of an organization?
3. How useful is accounting information to a business in terms of profitability or solvency?
Hypothesis is defined as a guess that are possible solutions to a problem. Hypothesis test events to determine the types of material may be viewed, on the other hand, is a tentative solution of the research problem.
Therefore, one hypothesis will be tested both in null and alternative forms.
The alternative hypothesis is stated below: -
Ho for null and Hi for alternative
Hi: - There is significance relationship between senior and junior staff of Alo Aluminium Enugu, on the need for proper accounting information in their establishment.
H0: - The null hypothesis is that there is no relationship between senior and junior talking the problem of proper accounting information in their establishment.
1.6 SIGNIFICANT OF THE STUDY
The study will highlight on the for controlling a business by way of keeping accurate records of a business transaction; preparing from those records useful information for management use.
According to White Head (1977) “According is the art of controlling a business by keeping accurate –keep-keeping records, preparing from those records certain statistics called accounting ratios, using those ratios to detect financial difficulties before they become serious, so that canter measure may be taken.
The roles of manager (Financial) is considerably different from what it was in the past and will no doubt continue to change manager of various business enterprises must grow to accept the changing environment and master its challenges.
Financial functions of raising and use of money has a very significant effect on the other functions. One of the primarily functions of managers is to procure funds, allocation of capital, management of assets and valuation of the form in the overall market.
Probably, there are two main questions that the mangers or owners of the business want to know-firstly whether or not the firm is operating at a profit. Secondly, whether or not the business will be able to meet its commitments as they fail due. According idea and data produces answers to the above questions.
Financial manager (accountant) is duty bound to prepare his accounting information in compliance with the status and standard set by the accounting professional bodies. The main information supplied b the accountant is known as cooperate reports, financial statement, or final account. He supplies potentially useful information to the investors, creditor, employees, trade unions, and related groups, consumer, government and its agencies, business and financial analysts as well as management.
The whole of financial accounting is based on the accounting equation. The accounting equation is expressed in financial statement called the “Balance sheet” Accounting is responsible for directing, controlling co-ordinating the work of the book-keeping staff.
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