CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY.

At independence Nigeria joined the committee of nation with the

hope for a better tomorrow. We were able to feed ourselves and

were of course almost self-sufficient. Subsequently our hopes

seemed unattainable. We seem to be going deeper and deeper

into the woods. The consensus is that it has been bad for Nigeria.

Due to the adverse economic condition prevailing in the country

many businesses have closed shops and even financial

institutions are being declared distressed at alarming rate.

Businesses that are yet to be submerged or that want to stay

afloat employ all kind of strategies. Some increase price adopt

promotional tools engage in aggressive marketing etc. whereas

others goes for an odd combination of activities and even undergo

different kind of small business to survive.

Any business or individual that wants to survive must make

the right decision. The era of mile of thumb is gone; employing it

is a sure way to fail absurdly.

The price of any conceivable item from garri and bread to

radio and book not to mention petrol has been soaring in

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geometric proportions over the year. The economy is truly in

distress. These compounds and complicates intricate are the

problem of the organisation vis-à-vis effective planning and

decision making processes. Other factors such as stagflation

taxation economic and political problem are the major problem

which affects information and decision making. The future

orientation is what most company and bank get from making

accounting decision .the computation and interpretation of

analytical ratios from financial statement enable bank to

determine their operation trends and provide a basis for

management decision making. Other users of financial analysis

are used in making financial decision and achieving the goal of

sustainability determines compliance with regulatory

requirements. Financial analysis is an investment that has

positive return in the future on how decision will be made how to

manage the finances to achieve the strategic goals of the

institution through decision making.

Many people think that accounting as a highly technical field

which can be understood only by professional accountants

actually nearly everyone practices accounting in one form or the

other. In modern times management require a wide variety of

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information to successfully accomplish its aim and objectives.

This information is mainly determined by the element of

uncertainty about the future and lack of knowledge about the

present. Some of these decisions are of strategic importance

having a large impact on the business others are routine

operating decision. Therefore accounting information is based on

laws and regulations governing the handling of accounting report

contained in the financial reports of organisation.

Making the right decision depends on the possession of

appropriate accurate and up to date information provided and

presented in a meaningful way. This study set out to examine the

contribution of sound accounting system in providing the

management with financial and other information basis for

dealing with decision problems that arises from their

organisational operations.

1.2 STATEMENT OF THE PROBLEM

Basically the nature of manufacturing business compels it to

carry out a great deal of book-keeping records based on

accounting principles and information provided with the

perpetual increase in the number of consumer of manufactured

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products it has become necessary to devise a systematic mean in

handling the resultant book-keeping and accounting activities.

A lot criticism has always been made about the service of the

organisation consumers complain of low quality product while

employers complain of lack of promotion inadequate salaries

lack of training etc.

Furthermore the major challenge facing every financial

institution\ business organisation of today is market relevance.

On-going fundament at changes in the global politics economy

and emerging competitions particularly challenges proper and

adequate contemporal accounting information for management

decision making. The company itself tries to coordinate all these

challenge effectively and efficiently so as to minimize any

anticipated and unanticipated pitfalls. If a sound and effective

accounting system is applied property by the manufacturing

organisation the difference will be clear.

Improper attention to the accounting system and handling of

accounting information has given birth to the under mentioned

problems.

Poor planning

Result to poor decision making

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Poor organisation and control of business activities and

unsatisfactory service to its customers.

Poor decision making in administrative activities of the

organisation.

1.3 OBJECTIVE OF THE STUDY

The objectives of the study are as follows;

1. To determine whether there has been problem in generating

and utilizing accounting information necessary for

management decision making.

2. To ascertain the extent in which accounting information

generated by accounts departments has contributed in

decision making process.

3. To ascertain the extent accounting information has

effectively performed or fulfils the basic roles of cost

minimization proper allocation of scare resource and

improvement in the production.

RESEARCH QUESTION

1. Are there problem in generating and utilizing accounting

information necessary for management decision making

process?

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2. To what extent does accounting information generated by

accounts department contributed in decision in making

process?

3. To what extent does accounting information has improved

effectively performed or fulfil the basic roles of cost

minimization proper allocation of scare resource and

improvement in the production?

RESEARCH HYPOTHESIS

NUMBER ONE

H

o

There are problem in generating and utilizing

accounting information necessary for management

decision making.

H

1

There are no problems in generating and utilizing

accounting information necessary for management

decision making.

NUMBER TWO

H

o

accounting information generated by accounts department

has not contributed in decision making process.

H

1

Accounting information generated by accounts

department has contributed in decision process.

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NUMBER THREE

H

o

Accounting information has not improved

effectively performed or fulfil the basic roles of cost

minimization proper allocation of scare resource and

improvement in the production.

H

1

Accounting information has improved effectively

performed or fulfil the basic roles of cost

minimization proper allocation of scare resource and

improvement in the production.

1.6 SCOPE AND LIMITATION OF THE STUDY

The research cannot treat all aspect and kind of accounting

information because the field is simply too wide. So only those

relevant to these studies were dealt with as per need- ratio

analysis cost-volume- profit analysis absorption and marginal

costing the contribution margin standard costing and variance

analysis linear program.

The availability of correct and up to data is not easy even

when available; one still encounters wholly unnecessary

bottlenecks due to our socio – cultural background vice versa

disclosure of information and bureaucracy. So this constituted

an impediment to this research work.

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Financial and time constraints were seriously encountered

by the researcher. Computational procedures of various

accounting information or tools are outside the scope of the work.

However those deemed necessary may be treated.

It is impossible to cover all the companies firms and other

business outfits in Nigeria

As a sample of the two companies in Enugu state were scheduled

and inferences made from these.

Though deliberate effort is being made to have a work wile

study with sufficient validity and reliability. This work should not

be viewed as a final solution to impact of accounting information

on decision making process. There are limitations on resources

for reference purposes especially responses on collection of data

many respondents give bias responses probably because of job

protection officer’s name and image protection personal

reluctance unnecessary fear of legal implication and so forth.

1.7 SIGNIFICANCE OF THE STUDY

This research study will help to maximise the beneficial impact of

accounting information on the decision making process of an

organization. This boosts the profitability of the organization as

well as ensuring its continuity as a business entity.

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It will help in the efficient allocation of scare resources that have

alternative being use as well as increase productivity thereby

uplifting the standard of living. It will review the improvement in

the organization or company handling the accounting

information and show equally the ways through which

improvement could be accomplished.

In fact all interested groups like shareholders employers

investors creditors government etc will benefit immensely.

This project will equally serve as a reference to student who may

be interested to embark on a research of this nature.

1.8 DEFINITION OF TERMS

EFFETIVENESS: The total or actual interest paid or earned in a

year expressed as a percentage of the principal amount at the

beginning of the period.

EFFICIENCY: A measurement of the ability of an organization to

produce and distribute its product. In accounting terms it is

qualified by a communism of the standard hours allowed for a

given level of production and actual hour taken.

ACCOUNTING INFORMATION: This is a system designed to

obtain the financial position of an organization as at the end of

the period.

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INFORMATION: Is a processed data used in obtaining detailed

data about a particular person thing or place.

LEVERAGES: They are used by companies of its limited assets to

guarantee substantial loans to finance its business.

FINANCIAL INFORMATION: This is information summarized by

a company’s activities over the last year. They consist of the profit

and loss account the cash flow statement etc.

ANALYSIS: In standard costing and budgetary control analysis

of various in order to seek their causes. The total profit of various

is analysed into sub – variance indicating the major reasons for

budged figures.

DEBT: A sum owned by one person or organization to a person

showing that the debt to be required to be settled within one

accounting period.

RATIO: To put company’s performance in percentage. The use of

accounting ratio to evaluate a company’s operating performance

and financial stability.

DECISION MAKING: This is the end of deciding between

alternative courses of action. Running of a business accounting

information and techniques are used to facilitate decision models

such as discounted cash flow.

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IMPACT: This means the duties responsibilities and functions.

As it has to do with work it is that fundamental obligation

incumbent on the public relations for the attainment of

democratic order in the organization policy.

Accounting: Is the process of producing needed information

regarding primarily the financial activities of economic entities by

Bartho N. Kezee 1996.

The wide scope of accounting can be recognized when one

considers the diversity of economic entity which cut across sizes

and bounders.

Accounting is the language used to cover the result of the

entity’s endeavours to the interested parties inform of financial

statement and the financial statement has been identified as

follows:

Statement of accounting policy.

Balance sheet.

Profit and loss account (income statements).

Notes on the accounts.

Statements of source and application of funds.

Value added statement.

Five years historical summary.

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INFORMATION ON DECISION MAKING PROCESS

Information consists of data that have been retrieved

processed or used for information purposes and as a basic for

forecasting and decision making process

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REFERENCES

Adeniyi A (2008); An Insight into Management Accounting and

Cost Accounting.

Drunny C (1973); Accounting and Finance Service Management

and Cost Accounting.

David G B (1974); Management and Information System.

Edward J B (1976); The Modern Accountancy Hand Book.

Okafor A U (2000) Principles of Accounting: The professional

approach. Owerri Hudson Jude Nigeria Publishers

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