Effect Of Accounting Information On Decision Making Process

Project and Seminar Material for Accountancy / Accounting

Effect Of Accounting Information On Decision Making Process


The paper examined the effect of accounting information on decision making process, with a particular reference to the Nigerian breweries plc. The research was geared towards understanding the operations in Nigeria breweries plc with an emphasis on decision making process. The problems, prospects and implications of the programme were also examined. The objective of the study is therefore to expose to various department the proper way to embark on effective accounting information. Firstly questionnaires were distribution of which thirty were completed and return using stratified random sampling. Also related literature dealing with the effect of Nigeria breweries plc were interviewed and secondary data were obtained from system. The data collected were later analysis and interpreted. From the study, it was discovered that accounting information is an important aspect of management policy, for higher productivity, efficiency and increased performance, though it in value a huge financial obligation. Finally, I will say that various organizations should therefore try and embark on accounting information on decision making for successful running of their organization.

Chapter One

1.0 Introduction

This research work on the effect of accounting information on decision making process, a study of Nigeria breweries Plc, Nite Mile Corner Enugu on the effect that accounting information exert in improver the decision making process of a company with reference to Nigeria breweries Plc Nite Mile Corner Enugu.

Decision making is simply making a choice out of several alternative or it is the process of studying and evaluating two or more available alternatives leading to a final choice.

1.1 Background of Study

With the view of being independence, Nigerians had the view of a better tomorrow. We were able to feed ourselves and provide ourselves with social, economic and political endeavor. Subsequently our hopes seemed unattained which made the country becomes as strong as the Iroko tree. The idea had, was that it would be worst for Nigerians to our economic adverse situation raising its ugly head. This economic crisis has made financial institutions industries (large or small scale) go into distress at alarming rate and those who service this financial problem has form the onset prepared his/her firm against this ugly situation by mapping out all kinds of straggles example increase in price of this goods, adopts favorable production tool, engage in marketing etc.

Any business, firm, establishment that wants to survive this present day bad economy in Nigeria must make a right decision, map out a good and competitive strategies to carry out his/her business successful. The price of any convincible item from garri and bread to electronic and educational items not to talk of the life wire of every man standing that is petrol which has presently made life unable for the adjust.

The economy is really in direstacts, the era of mile thumb is employing it, is a sure way final abysmaky. Organizing human and natural resources intricately are the problems of various organization, effective planning and decision making process. Other factors such as stag flatiron taxation, economic and political empowerment this research accounting, cost accounting as well as management accounting. There are other branches of accounting that would be favorable “Financial Accounting” is that part of accounting which covers the classification and recording of actual transactions of an entitling in monetary (A CASE STUDY OF ANAMMCO ENUGU)

1.2 Statement of the Problem

A decision is essential for an organization’s survival and development, since it is prior to any action (Socea, 2012). A manager is an individual responsible for an organization or a set of entities. Any manager is invested with formal authority in accordance with his assigned statute. In their role, managers have to make effective decisions to keep the organization flourishing. Hence, as long as there is management, there will be the “problem” of how to manage better. Therefore, as Greenberg & Baron (2008) say, to make decisions is one of the most important and critical activities of organizations. Since, organizations as systems build themselves up by making decisions. Every made decision creates and leads to a new decision. These decisions might involve the strategic direction of the organization or simply just deal with the day-to-day activities of employees.

Thus, management is constantly confronted with the problem of alternative decision making, especially knowing that resources are relatively scarce and limited. This necessitates doing the right things, the appropriate use of resources and the need to set different things in the order of importance. However, as we live in an age of data abundance. Business managers have today access to far more data than any previous generation of managers, and that is transforming the way many business decisions are made.

Therefore, it is pertinent that quality accounting information is made available for proper and precise decision- making, maximization of profitability and optimal utilization of scarce resources. Because accounting information is not only required for evaluation of the past and keeping the present on course; it is useful in planning the future of the organization. (Nnenna, 2012) Given these conditions, the accelerating pace of business changes and the significant amounts of information available to businesses using modern technology, the challenge is to filter out useful information and present it in a manner that makes it useful for managers.

1.3 Research Questions

Main Research Question
  1. What are the effects of accounting information on the management decision making?
Specifics Research Questions
  1. What type of decisions are made in Anammco LTD Enugu based on accounting information?
  2. What are the characteristics that must be provided in the accounting information used by Anammco LTD Enugu management in decision making?

1.4 Research Objectives

Main Research Objective
  1. To examine the effects of Accounting Information on Management decision making in Nigeria, Anammco LTD Enugu in in particular.
Specifics Research Objectives
  1. To study the effect of reliability of accounting information on decision making in Anammco LTD Enugu.
  2. To study the effect of comparability of accounting information on decision making in Anammco LTD Enugu.

1.5 Research Hypothesis

Ho1: The reliability of accounting information has no effect on the management of Anammco LTD’s decision making.

Ho2: The comparability of accounting information has no effect on Anammco LTD Enugu’s management decision making.

1.6 Significance of Study

This study will be of immense benefit different types of stakeholders by improving their organisation performance, such stakeholders are financial analysts, companies, investors and other financial organisation by widening their knowledge on the effects of accounting information on management decisions making. The study will make organisation (Anammco LTD Enugu) to appreciate the importance of sound accounting information in the provision of information necessary for decision making.

The study also helps researchers, practitioners and also gives a major contribution to the body of knowledge through suggesting areas that require improvement. It also contributes to the body of literature on financial accounting information and making of decisions.

Academicians in scholars in the commercial branch like management and accounting will be able to access this study as reference (as a resource material and an addition to existing literature or knowledge) to students in this noble institution and other school who may be interested to embark on further research study. They will be able to add value on the gaps identified by this study.

The suggestions and recommendations from the study are useful to the management of the Anammco LTD Enugu, since they provide clear picture on the effects of accounting information on management decisions making.

Last and famous, this study will enhance and broaden the researcher in the field of interest so as to better understand the importance and the effects of an accounting information on the different management decisions made and also a way of proving lies and to support truths.

1.7 Scope and Limitations of Study

This study will be limited to a geographical entity known as Nigeria and specifically Anammco LTD Enugu.

There are some limitations encountered by the researcher in the process of this research which limited the scope to only access bank plc branches, some of the limitations are as follows;

1. Time factor

The time for the research is not enough to carry out intensive study since some of information is not easily and quickly available. Therefore, this research will have to use weekends to collect, analyse and interpret the collected data.

2. Lack of Enough Fund

The fund provided for the research is not enough to meet all expenses like transport cost, meal allowance, accommodations, photocopies and stationeries expenses. Hence the study will be conducted using the fund provided by the sponsor(parents) and the researcher own fund.

3. Data Confidentiality

Most of organizations are not ready to provide their data. So Anammco LTD Enugu may not provide adequate and sufficient data. Therefore, the researcher convinced management that data provided would only be used for the research purpose only, and will not be disclosed to anyone who is not concerned.

4. Lack of experience

We have to underline also that no one of us has an experience before in conducting a study in this extent. For us it was hard to conduct this bachelor project writing, especially the analysis was very difficult to do. Fortunately, we got some help and support. We hope that this work is pertinent.

5. Unwillingness and Non-Response of Employees

Occasionally the respondents decided to give out data that did not correspond to the study as well as delayed on filling questionnaires during data collection. This study notified respondents that the data collected would not be used for any other purpose.
So, they became cooperative.

1.8 Organisation of Study

This study is made up five chapters. Chapter one introduces the work with background information on accounting information and decision making management, problem statement, research question and objectives of the study. This chapter also brings out the research hypothesis, significant of the study. Chapter two is made up of literature review outlining the conceptual, theoretical and empirical review. Chapter three brings out the study and it is based on methods and procedure. Chapter four present the discussion analysis of the result. Finally, chapter five summarizes the major findings, conclusion and recommendations.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

The chapter gives a summary with major findings aligned to the objectives. A conclusion on the relationship between the study variables was deduced in line with the objectives. Suggestions for recommendations and area for further studies.

5.2 Summary

The study general objective was to study the effect of accounting information on decision making in Anammco LTD Enugu, Enugu-Nigeria.

The first objective was to study the effect of reliability of accounting information on decision making in Anammco LTD Enugu. Results indicated that reliability was important in determining decision making in Anammco LTD Enugu. This was supported by majority of the respondents who strongly agreed that that information generated from accounting systems displayed an element of completeness, Accounting information are verifiable and this is key in the decision making process and agreed that financial information was faithfully represented.

According to correlation results, there was a strong, positive and statistically significant association between reliability and decision making. There is also a positive relationship between reliability and decision making in Anammco LTD Enugu according to the regression results.

The second objective was to assess the comparability of financial accounting information on decision making in Anammco LTD Enugu. Results indicated that comparability was important in determining decision making in public benefit organizations in Anammco LTD Enugu. This was supported by majority of the respondents who strongly agreed that Accounting periods are comparable, Accounting information make it easy for users to choose between alternatives, Users are able to compare financial reports and help users to derive meaningful conclusions, financial information made it easier for users to choose between alternatives, and that users of financial information were able to compare financial reports generated in different periods.

According to correlation results, there was a strong and positive association between the comparability and decision making and this was statistically significant. There is also existence of a positive relationship between comparability and decision making according to regression results.

5.3 Conclusions

From the study findings, it can be concluded that accounting information reliability as a characteristic on accounting information used by management in decision making in Anammco LTD Enugu was verifiable, financial information was faithfully represented and had an element of completeness. It can further be concluded that accounting information in Anammco LTD Enugu, Nigeria was characterized by reliability and this reliability was a key predictor of decision making in Anammco LTD Enugu.

It can also be concluded that accounting information comparability as a characteristic depended on whether financial statements of one accounting period are comparable to another, whether financial information made it easier for users to choose between alternatives and whether the Users of accounting information are able to compare financial reports generated in different periods. Further, accounting information in Anammco LTD, Enugu Nigeria had adequate comparability characteristics and this comparability was a key determinant of decision making in Anammco LTD Enugu.

5.4 Recommendations

Through this study the researcher recommended the following specific task as a way of insuring that accounting information is important in management to make decisions.

  1. From the study findings, the researcher recommends that the management puts in measures to improve both quantitative and qualitative characteristics of financial statements so that they are easily comparable to other industries.
  2. All systems have to be computerized and modern speed system network should be established so that the information could reach the accounting department on time. The management should also train its workers on the accounting package for quick and efficient accounting records
  3. The management should ensure that all staff in the administrative and finance department is well trained. Sufficient funds should be set aside to provide for staff training in order to Increase their skills in comparing financial reports. The staff in accounting department must be a holder of any professional degree such as Advanced Diploma, Degree, Masters and Certified Public Accountant (CPA).
  4. Qualified and capable personnel should be employed for accounting information preparation and presentation.
  5. Monitoring and control actions should be enhanced in the decision making process on specific decisions according to the stipulated processes associated so that desired goals are achieved in improving the functionality and performance of the organization.
  6. The researcher recommends that there should be a clear methodology designed on how decisions should be undertaken in an attempt to address any concern in the organization.

5.5 Area for Further Study

The study focused on accounting information on management decision making at Anammco LTD Enugu Enugu Nigeria. This study is not exhaustive in nature and context. The researcher suggests that another study on accounting information and decision making should be conducted in another geographical context e.g.
Yaoundé, Ngaoundéré etc.

Also, this research was limited on the effects of quality accounting information on decision making and so other areas apart from characteristics of accounting information could be researched and this include;

  1. How the usability of the management accounting reports could be improved?
  2. The impact of accounting information systems on decision making.

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