Adoption Of Accounting Information As The Major Tool For Decision Making

Adoption Of Accounting Information As The Major Tool For Decision Making

Abstract

Accounting information has contributed to the environment’s rapid expansion, requiring management to keep abreast of all current information. That will assist them in attaining their goals and decision-making.

Accounting information aids management in planning and evaluating information because it consists of data organized for a specific decision-making purpose.

List Of Tables

Approval Page Certification Dedication Acknowledgment Title Page

Listing Of Contents

First Chapter – Introduction

1.1 Introduction and Background of the Study 1.2 Problem Statement 1.3 Study Objective 1.4 Study Significance 1.5 Scope and Limitations

1.6 Hypothesis Statement 1.7 Terms Defined Reference

Chapter Two – Review of the Literature

2.1 Introduction To Small-Scale Industries

2.2 Accounting Information Types

2.3 Qualities Of Accounting Data

2.4 Levels Of Management And Decisions

2.5 Examples of Accounting Information Decision-Making and Application

2.6 Accounting Information Users

References for the 2.7 Accounting Information and Communication System

Third Chapter – Research Methodology

3.1 Presentation

3.2 Sampling Technique

3.3 Design of Research

3.4 Sources Of Information

Four Chapters on Data Presentation and Analysis

4.2 Presentation And Investigation

4.3 The application of accounting data has improved pricing strategies in small-scale industries.

4.4 Management Depends On Accounting Data For Numerous Decisions

4.5 Interview-Related References

Discussion Of Findings, Recommendations, And Conclusion Of Chapter Five

5.1 Findings Discussions 5.2 Recommendations

5.3 Summaries

References

Bibliography Appendix Questionnaire.

FIRST PART

1.0 INTRODUCTION 1.1 CONTEXT OF THE STUDY

The vast majority of the organization’s efforts were directed toward achieving its intended, planned, and overall goals. In every operation of an organization, but particularly in small-scale industries, achieving efficiency and effectiveness depends heavily on the quality of accounting information available and how the information is utilized by the organization. However, according to Don T. Coster et al (1978), information is the life wire of every business. Therefore, for any business to succeed in today’s rapidly changing environment, the management must keep abreast of all current and relevant information that will assist them in achieving their predetermined goals; otherwise, stagnation is likely. Typically, a manager who is making a decision will want to ensure that this information is exhaustive. This is only possible through effective presentation and application in the appropriate contexts.

When examining the importance and usefulness of accounting information to management, particularly in small-scale industry, it is pertinent to note that management also employs other types of information for decision making. Like information by Engineers, Lawyers, Doctors, Architects, and other company officials, however, information by accountants goes a long way toward determining the assets base of a company and its liabilities to determine its cost price of production in pricing its products and also when profits or losses are made.

Accounting information is used in decision-making to select a single course of action from a variety of dissimilar and unrelated alternatives. It has been observed that decision making is the concluding step in the managerial process; however, the accuracy and relevance of accounting information supplied by the accountant are crucial to the relevance of a management decision.

Accounting information is essential to the decision system when the decision involves business and economic issues because it provides quantitative data for planning, control, and evaluation.

– Planning is the process of formulating a course of action; it entails establishing a goal, identifying alternative means of achieving the goal, and determining which alternative is the most effective course of action.

Control is the procedure of ensuring that plans are implemented. In other terms, are plans and actions consistent? At this juncture, the accountant may be expected to provide information on actual costs, as compared to those that were originally anticipated.

– Evaluation incorporates the entire decision system as a method for analyzing and enhancing the decision system. It asks whether the initial objective was achieved (Feedback).If not, it could have been due to poor planning or control, or the selection of the incorrect objective.

A DECISION SYSTEM AND ACCOUNTING INFORMATION

The character of managers’ decisions determines the success and survival of an organization (TURBMAN & LOOMBA, 1976)Accounting information that is timely, objectively summarized, and draws attention to problem areas is indispensable for management’s decision-making. Thus, “All decisions are largely based on information; the quality of management decisions will reflect the quality of the accounting and other information it receives” (GARRISON, 1982).

Important accounting information may include the presentation of weekly, monthly, or quarterly accounts. These routine accounts may include a trading and profit and loss account with period and year-to-date figures, as well as a balance sheet. Routine duties include assisting management with planning and forecasting future results. The process is referred to as budgeting, and it is considered alongside budgetary control.

It is of the uttermost importance to identify users of accounting information or reports other than management, such as shareholders interested in their capital investment.

– Government that is genuinely concerned with profit to assist them in determining tasks and other policies

– Creditors, who are genuinely concerned with whether the organization is creditworthy.

A solid profit or consistent growth or increase in profit may signal to employees that they are entitled to a larger bonus.

– Finally, the society where the community is located has a strong desire to be employed and to have basic amenities due to the company’s influence.

Consequently, “accounting information is data organized for the specific purpose of decision making” (OSISIOMA, 1996).

The researcher agrees with the remarks of Garrison in 1982: thus! The manager is interested in the summaries derived from the accounting records, and relies on these summaries.

1.2 STATEMENT OF PROBLEMS

According to Garrison (1982), the three applications of accounting information for management are as follows:

– To supervise day-to-day operations.

– Plan effectively and pay close attention to plan deviations

– Determine the optimal operational problem resolution for the organization.

Hypothetically, the question persists as to why management has not been able to give accounting data the necessary consideration.

It is lamentable that accountants’ tardiness in communicating accounting information to management can undermine a manager’s efforts and the shareholders’ trust in management. The inability of management to recognize accounting information as vital to survival must be investigated, and the management must be reoriented accordingly. That accounting information is an indispensable resource.

The researcher is interested in discovering how accounting data influences managerial decision-making. It is utilized by the external management, or are all decisions dependent on accounting data? How is the information interpreted and conveyed to management?

Hypothetically, the researcher will also disclose some decisions made by small-scale industries and assess the extent to which accounting information influences their decisions, if at all.

1.3 PURPOSE OF STUDY

The objectives of the investigation are as follows:

– The study will require and investigate the various decision areas in small-scale industries in Enugu State for which accounting information is typically provided.

– The researcher will determine the extent to which management relies on these accounting data when making decisions.

– Reorienting management to the various types of accounting data available and convincing them to view accounting as a single instrument for determining profitability, asset base, liability, cost of production, and price to fix their products.

1.4 SIGNIFICANCE OF STUDY

The significance of this study will go a long way toward enlightening all members of managerial groups regarding the significance of accounting data, i.e., recognizing accounting tools as indispensable and a pillar of management decision-making.

It leads some individuals directly into the discipline of accounting. They must understand how to interpret the available information. To increase understanding of how accounting information functions effectively and efficiently. Since information technology is presently dominating, it is recommended that additional research be conducted.

1.5 SCOPE AND LIMITATIONS.

The researcher has discovered that the modern accountant is not only concerned with record keeping, but also focuses on the ultimate requirements of those who use accounting information, whether they are internal or external to the business. Therefore, accounting is not an end in and of itself. Instead, it is a system of information that measures, processes, and communicates financial information about a specific economic entity.

This project aims to examine how accounting information assists management in making decisions regarding the profitability of its products, how it determines the prices of its products, the costs of producing its assets and liabilities, and the researcher’s opinion. Enugu state will be sufficient for the researcher’s sample size considerations.

The following will restrict the researcher’s ability to produce an intensive project and superior work:

– The limited time available for the academic exercise, which poses a significant challenge, albeit one that can be surmounted. – In most cases, management is not present, which necessitates that the researcher work harder to collect the necessary data from the management involved. When they are present, some may be reluctant to reveal their mode of operation.

– Finances are one of the obstacles, but above all, the pleasure of writing is what keeps one going.

1.6 Statement Of Hypothesis

H0 The application of accounting data has not improved pricing strategies in modest businesses.

H1 The application of accounting data has improved pricing strategies in small-scale industries.

H0 Management does not base its numerous decisions on accounting data.

H1 Administration relies on accounting data to make numerous decisions.

1.7 Definition Of Terms

Accounting is the basis for providing quantitative information, predominantly of a financial nature, about economic entities for the purpose of facilitating economic decision-making.

Accounting information is a tool, and like most tools, it cannot be of much direct assistance to those who are unable, hesitant, or unwilling to use it properly.

Communication network is the conduit through which the information system is presented to management and other interested parties for decision-making.

Decision – A decision is a selection of alternatives and means to pursue an objective.

Financial Accounting is a type of information that is reported to and utilized by external parties.

A company’s management is the collection of individuals with overall responsibility for achieving the organization’s objectives.

Small – scale enterprises according top Okoye defines it as follows in the first edition of “Pioneer Accounting”: “The small scale enterprise is an economic enterprise with a founder who is the largest shareholder in the enterprise, with shares distributed among the founder’s children and relatives.”

Price – is the monetary consideration received, given, or received in exchange for the grading of products or services.

Incentive share is the monetary enhancing items and monetary that management implements to enhance the working conditions of the employees so that they will contribute more at work.

Routine is the manner in which accounting data should be routinely utilized for decision making.

A budgetary tool is the comprehensive process of developing plans for a company’s anticipated operations and controlling operations to assist in  achieving those plans.