The Use Of Financial Accounting As A Tool For Managerial Decision Making

The Use Of Financial Accounting As A Tool For Managerial Decision Making

Chapter One

Preface

. Background To The Study

In recent times the advancement in counting sale system modules each over the world has made business organisations to ply coffers in this area if they’re to contend favourably among their original and foreign counterparts. Gone were the days when business organisations were simply needed to make profit, survive and give a fair return to investors ’ on their interest. The ultramodern business organisations find itself in the atmosphere of global misgivings, cut throat competition locally and internationally and unknown change in the frugality. Hence, a great demand is frequently placed on the directors of these organisations to make realistic and informed opinions if the organisation is to move forward as the success or else of any organisation is frequently a function of the sum of the opinions taken in the history. still, the quality of opinions taken by directors rests upon the substance and delicacy of fiscal account information’s handed by information systems available to them.

In moment’s world, Financial account provides the rules and structure for the vehicle of fiscal information about businesses( and other associations). At any point in time, some businesses are poised to prosper while others teeter on the verge of failure. numerous people are seriously interested in assessing the degree of success achieved by a particular association as well as its prospects for the future. While a many introductory procedures or styles have changed, the purpose of fiscal account remains the same. Business possessors frequently use account to measure the fiscal performance of their companies and make business opinions.

The American Institute of Certified Public Accountants has defined the Financial Accounting as “ the art of recording, classifying and summarising in as significant manner and in terms of plutocrat deals and events which in part, at least of a fiscal character, and interpreting the results thereof ”. American Accounting Association defines account as “ the process of relating, measuring, and communicating profitable information to permit informed judgements and opinions by druggies of the information.

It’s noteworthy to say then that fiscal Account derives its source from counting sale data and information. Financial Accounting produces results which enhances decision making in the organisation. Hence, it can safely be concluded that Financial Accounting isn’t an end in itself but a means to an end. i.e. decision making to ameliorate commercial performance, and also produces detailed and scrutable account information which are inestimable base for decision timber.

fiscal account provides data that these individualities need and wants, also numerous possible benefits can be gained from acquiring a strong knowledge of fiscal account and the means by which information is communicated about an association. Around the world, millions of individualities make critical judgments each day about the businesses and other associations they encounter. Developing the capability to dissect fiscal information and also using that knowledge to arrive at sound opinions can be critically important.

Financial Accounting is a service exertion. It uses words and symbols to communicate fiscal information useful for decision timber. The language and symbols used have developed from the foremost known account records. As a profession, account has evolved in response to society’s need for profitable information to help people make profitable opinions. It is frequently called the ‘ language of business ’. To be effective, the philanthropist must understand the communication that the sender intends to convey. You must learn the meaning of the words and symbols used by accountants. numerous people with little knowledge of account must interpret account data.

Financial Accounting is regarded as part and parcel of moment’s life which is necessary to understand the accurate fiscal situation of the association and used as the base of making any opinions. Since strategic opinions have long- term effect on the business and thus it’s important to dissect counting information for making strategic opinions, it helps directors understanding their tasks more easily and reducing query before making their opinions( Chong, 1996). Account is occasionally appertained to as a means to an end, with the ending being the decision that’s helped by the vacuity of counting information( Arneld and Hope, 1990), it also aids decision timber and furnishing information applicable to the decision and to the decision maker, further reason why it effective and effective fiscal application plays a central part in operation decision making process.

individualities who attain a proper position of knowledge of fiscal account can use this information to make opinions grounded on the association’s perceived fiscal health and outlook. similar opinions might include assessing employment eventuality, advancing plutocrat, granting credit, and buying or dealing power shares. still, fiscal account doesn’t address issues that are purely of an internal nature, similar as whether an association should buy or lease outfit or the position of pay raises. Information to guide similar internal opinions is generated according to directorial account rules and procedures that are introduced in other books and courses. Despite not being directed toward the inner workings of an association, workers are interested in fiscal account because it helps them assess the unborn fiscal prospects of their employer.

fiscal account refers to the vehicle of information about an association as a whole and is most constantly directed to aiding outside decision makers, it’s also designed to portray the overall fiscal condition and prospects of an association. Every hand should be relatively interested in assessing that fiscal information to judge unborn organisational prospects.

Eventually the ultimate purpose of this exploration study is to give colorful druggies of fiscal account information with a rich understanding of the uses, benefits, and significance of fiscal account so they can estimate available information and also make good choices for operation opinions.

. Statement Of Problem

The major purpose of the use of fiscal account information is to minimize threat, failure and misgivings and also stay ahead of challengers. Notwithstanding the immense benefit of use of counting information, it’s generally conceded that utmost unqualified accountants induce inaccurate information and so affect in failure of associations to achieve asked thing. There are cases of directors refusing the use of counting information because of their incapability to interpret similar data, thereby making the association to remain at “ status quo figure ”. These problems largely contribute to the failure of the use of counting information in business with the result that inaccurate opinions are made to the detriment of the association.

directors of certain businesses don’t have sound account systems to enable them cover operating charges and earnings. They don’t need the warings communicated by fiscal account information. This ignorance or lack of fiscal account information, may lead to thenon-effective and hamstrung accomplishment of the establishment’s objects, It’s only through counting information that directors and external druggies get a picture of the association as a total reality. directors who fail to realize this don’t appreciate an accountants analysis in respect of fiscal account information generated. This may lead to poor opinions being taken and it may affect the profitability and performance of the association.

likewise, Inspite of the fact that convention of neutrality is admired in account but to record certain events estimates have to be made which requires particular judgement. It’s veritably delicate to anticipate delicacy in unborn estimates and neutrality suffers. For illustration, in order to determine the quantum of deprecation to be charged every time for the use of fixed asset it’s needed to estimate( a) unborn life of the asset, and( b) scrap value of the asset. therefore in account we don’t determine but measure the income.

utmost profit making associations in Nigeria are still, frequently encountered with account and fiscal operation challenges. Poor record keeping, hamstrung use of counting information to support their fiscal decision- timber and the low quality and trustability of fiscal data are part of the main problems in fiscal operation enterprises of these companies.

Adeboye 2005) While proper account is a useful system for making sound profitable opinions, The abuse, early, poor record keeping, and trip of counting information also causes utmost establishment’s to apply and make poor fiscal opinions, these short appearances might be the cause of difficulties to succeed and to raise fund or adopt plutocrat during the after stage. In the worst case, might face with the failure and maybe ruin in the end.

Eventually, Grounded on the fact that the fiscal account is one of the social lores which aim to serve colorful requirements of the private and public business installations, it’s affected by the changes of the general profitable, social, legal and political and political conditions prevailing in each country or certain terrain at each period. The account information is redounded by certain conditions which change due to colorful environmental factors within the profitable, social, legal and political surroundings in which the accountancy works.

. Objects Of The Study

As a central ideal, this study seeks to estimate the use of Financial Accounting as tools for operation in opinions making in an association. But more specifically, it attempts to achieve the following

1. Find the causes of failure in the attainment of association ideal, performing from lack of acceptable application of counting information.

2. Explain what account information is necessary, who are the druggies and the colorful ways each of these druggies use the information and the benefits derivable from them.

3. punctuate the goods of directorial neglect of counting information on the achievement of the organizational thing.

4. To ascertain the extent to which Accounting is being used as a fiscal tool for measuring fiscal performance of organisation.

5. dissect the relationship between fiscal account, counting information and operation decision timber.

6. Determine the effectiveness of Accounting Department of the association in decision timber of operation of organisations.

. Exploration Question

The exploration question provides a frame and guidelines through which substantial knowledge of the exploration study can be understood.

The exploration question asked includes

1. What are the causes of failure in the attainment of association ideal, performing from lack of acceptable application of counting information.

2. What account information is necessary and who are the druggies are and the colorful ways each of these druggies use the information and the benefits derivable from them.

3. What the goods of directorial neglect of counting information on the achievement of the organizational thing.

4. To what extent is fiscal Account being used as a fiscal tool for measuring fiscal performance of organisation.

5. Is there any relationship between fiscal account, counting information and operation decision timber.

6. Effectiveness of Accounting Department of the association in decision timber of operation of organisations.

. Statement Of Thesis

The Statement of Hypothesis is “ a enterprise of the way the variables of study behaves ” it’s a companion system to be used in their analysis. The requirements for similar attendants rise to the following thesis;

The suppositions are stated in the null form for testing

thesis one

Hi Financial Accounting isn’t a practical tool for effective and effective operation of opinions in an association

thesis Two

Hi Financial Accounting don’t plays a significant part in operation fiscal decision making part.

. Significance Of The Study

The significance of this study was to produce through attestation, an mindfulness, benefit and the significance of fiscal account as a veritable tools for operation decision making in the association, both financially and economically.

Account is decreasingly seen as a social rather than a pure specialized miracle as it’s intertwined in both organizational and social surrounds( Hopwood, 1985). Following this notion, this study is inspired by the desire to understand the implicit environment of the use of fiscal account in an association planning, control and operation decision timber, A study of this nature is substantially important in relation to developing countries like Nigeria.

This study will be of great significance to the government, commercial existent, fiscal andnon-financial institution since it’ll help to determine the factual places played by counting department of this fiscal institution, as it’ll also give indepth knowledge on the duties and liabilities of the accountant.

This paper would offer useful perceptivity on the utility of fiscal account as a conception, counting information, and also give a contextual frame for experimenters on the relationship of fiscal account with other aspect of account in an association.

Eventually it’ll be of great significance to seminaries and scholars, it’ll serve as a reference point for unborn experimenters who’ll want to probe more on the content.

. Compass Of The Study

The study builts around the implicit use of fiscal account for operation decision making in an associations, in Nigeria.(( by making use of Access Bank Plc, as a case study.)

still, the exploration was limited to Access Bank Plc driver in Sagamu, Ogun State megalopolis due the schedule and vicinity of the experimenter.

. Limitation Of The Study

Limitations image in this exploration work are

1. Restriction on data generation the data attained was confined to the case study

2. Time frame of this exploration work is another limitation as further time may be needed to make further findings, because acceptable time will be needed to get up to date current data from the bank and the guests.

3. Distribution and reclamation of questionnaires from repliers( banks functionary and the guests) might also constitute limitation as we may not be suitable to recoup all questionnaires.

4. Also there might be fiscal and transportation constraints to this study as these two factors will be at our capacity which might not be enough to give us asked results.

. Description Of Terms

1. Financial Accounting Financial account is concerned with reporting general- purpose information to druggies external to an reality in order to help them make sound profitable opinions about the reality’s performance and fiscal position. It also deals with the conservation of books of accounts with a view to ascertain the profitability and the fiscal status of the business.

2. Decision- Making Decision timber can be defined as relating druthers , assessing similar druthers and choosing from similar druthers . Decision timber can be viewed as the veritably fabric of which systematized exertion is made.

3. Financial Accountant The part of a fiscal accountant is to record, summarise and report on the fiscal deals of an organisation in such a way that it’s possible for someone outside of the organisation to get an accurate picture of the organisation’s fiscal position and performance

4. Accountant An accountant is any person who possesses a professional license to exercise accountancy from a honored professional body and has legal capacity and authority to accomplish the duties of accountants in taxation and inspection practice.

5. fiscal statement A fiscal statement( or fiscal report) is a formal record of the fiscal conditioning of a business, person, or otherentity.It alsoprovide information regarding the position and performance of a business, similar as its means, arrears, equity, income, charges and cash inflow.

6. operation This is the process by which business systems are administered. It’s also a process of planning, controlling and decision- making in an association.

7. Company This refers to a legal reality that carryout business in its name.

8. Business strategy An integrated set of plans and conduct designed to enable the business to gain an advantage over its challengers and, in doing so, maximize its gains.

9. Bespeak- keeping It’s the art of recording in the books of accounts the financial aspect of marketable or fiscal deals.

10. sale A sale is a encouragement from one person and a affiliated response from another.