The Relevance Of Accounting Information In Management Decision Making (A Case Study Of Okin Biscuit Nigeria Limited, Offa)
The project concentrate mostly on the relevance of accounting information to management decision making process of which Okin Biscuit Nigeria limited of is the case study.
Financial accounting deals with the periodic measurement and reporting of the profit or loss and asset and liabilities of organization and Balance sheet of the year ended. The balance sheet is a statement of financial position and it report is on the status of the assets as individual items as a class .
Data’s sources through the case study has revealed on design by the researcher to fill by the staff of the organization in accounting department and information that have already been recorded in the subject data in various document including book annual report of the organization.
Finally, with my recommendations, we hope stepping stone for further study.
Table of Contents
- Title Page
- Table Of Contents
- 1.1 Background of the Study
- 1.2 Statement of the Problem
- 1.3 Purpose of the Study
- 1.4 Scope and Limitation of the Study
- 1.5 Significance of the Study
- 1.6 Research Methodology
- 1.7 Plan of the Study
- 1.8 Definition of Terms
- 2.0 Historical Background of Accounting
- 2.1 Accounting and Society
- 2.2 Accounting Scope and Functions
- 2.3 Inter-Related Roles of Branches of Accounting
- 2.4 Accounting Information Defined
- 2.5 User’s of Accounting Information
- 2.6 Limitation of Accounting Information
- 2.7 Accounting Policies
- 2.8 Decision Making
- 2.9 References
Data Presentation, Analysis and Interpretation
- 4.0 Data Analysis
- 4.1 Instrument of Analysis
- 4.2 Return of Questionnaire
- 4.3 Test of Hypothesis
- 4.4 Interpretation
5.0 Summary, Conclusion and Recommendation
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendation
1.1 Background of the Study
Accounting is becoming indispensable in a modern society. Accounting provide information, which is vital to the economic decision that have to be made by the individual, the company and government, large companies requires the services of accounting to understand what goes on in fan – flung branches, to evaluate the effectiveness of company policies on operation an the impact of government fiscal and instrument. This becomes over more time with massive growth of individual, organization. Just imagine the difficulties of knowing anything significance about the operation and performance of the UAC, Lever Brother, mobile, Pz Industries, Power Holding Company Nigeria or Nigeria Railway Corporation without accounting information.
Decision – making is essentially the process of adopting a particular course of action in preference to alternative possibilities.
The responsibilities of making strategic decision relating to the smooth operation if whole organization rest with the management responsibilities for getting things done and can be found in government institution, business, professional bodies, non – profitable organization. The management is responsible for getting thing done and can be found in public and government institution professional bodies.
Management must be able to evaluate the accounting data, in order to decide on what courses of action to take. The financial information or data so used are generated from the financial activities of the organization.
One many be puzzled as to whom or what “management”. This has been defined from three (3) perspective
- As a profession
- As a position
- As a process
The definition of management as it is seen as a position of what is considered in this research work. As a position, authority and responsibility within the organization ensuring the smooth running of day – to – day activities of the organization and generally act as OVERSEERS.
Basically, within a organization, management sees to the establishment of a proper and well organize and will coordinated accounting system to provide and communicate information when properly interpreted, will allow for good judgment ad decision.
It should be noted that at this point that accounting information is not only a great importance to the management out of some other people who make up the external and internal users. These are:-
- The shareholder or equity provider
- Creditor / owners of loan capital
- Internal revenue authorities competitors and
- Member of the public
But for the purpose of this research work, we shall only consider accounting information and its relevance in management decision – making process.
Accounting is basically dividend into the Financial Accounting and the Management Accounting aspect.
Financial accounting, deal with periodic management and reporting if the profit or loss, asset and liabilities of the organization.
Management accounting, on the other hand, is concerned with providing information for decision about level of output the most optional choice of alternative their cost, revenue and impact and the expected changes in the economy.
Accounting managerial of financial provides information and communicates this to one of another. Both branches of accounting house much common. Information is in each case, generated with a view to facilitating decision – making.
The user to which this accounting is put or the determination of the role it plays in decision making will be seen in the context of, this research works.
1.2 Statements of Problem
It is a know fact that at every stage of our lives, decision have to e made. These decision may sometimes be made in conditions where all information not available. In either case, these decision may have every significant effect may be made to ensure that the best possible decision are made under any circumstance.
The adoption of any case of action will always entail an expenditure of time and resource, which would have been applied to other means.
In decision making some classical Techniques are applied which could be wrong and thus, create problem are a result of improver decision taken they includes.
Decision to do what one feels is right which mighty one be the best in all situation.
Decision on particular course of action based on ones past or past event that is a case of we have always done it like this.
Decision making are made by the superior, shareholder and boss on the motion that he known everything and even because of important position he holds, this is not the best.
Shorting of responsibilities of the decision making that is trying to play safe.
Although these methods may sometimes work but, it should be noted that supplying all the information required for then making decision are not the exclusive tensible to assist in making decision which will not entail a waste of resource of any sort.
Frankly, the ability to make proper decision is usually hindered by the Nigeria economy as he withies by the various economic technological development and the turn bulient political environment.
Management of an organization must be able to identify opportunities to be exported ad the threats and problem to be avoid.
1.3 Purpose of the Study
The purpose of this research work are:-
- To review the role of accounting information play in the management decision making process at organization with reference to Okin Biscuit Nigeria Limited, Offa
- To determine if the accounting information generated by account department assist in meeting the objective of the organization.
- To examine the reason for employing accounting Information in the decision making process.
- To examine the reason for employing accounting in management decision making process.
- To examine the reason for employing accounting in management decision making process.
- To examine critically the nature of accounting information.
- Research will help to develop the accounting information standard of system in such a way that it will more towards intended goals.
- To determine the problem that is faced in the management by making important decision.
1.4 Scope and Limitation of the Study
The scope of study of this research project deals specifically with the relevance of Accounting information in management decision making in Okin Biscuit Nigeria Limited Offa.
The study was limited to the aforementioned are area study of the role of accounting information in the decision making process of Okin Biscuit Nigeria Limited Offa. Due to the financial problem and the time to carry out the research work is limited and also there is no enough materials to be used in the research work.
1.5 Significance of the Study
Decision making is one of the key functions of management of any organization. It is a consensus among management writers that decision making necessary for the attainment organization effectiveness.
The information that accounting provide is usually needed by the enterprises itself. It could also be require. However by the government tax authority and agencies. Some important issues concerns such as inflation, unemployment, wages increase and output. And output distribution is effected uncritical wages by business and public enterprises. Thus by having information such as that provided by Accounting and private and public organization the causes and courses of economy problem are more easily determined. Hopefully, better solution result.
Finally it will not therefore be out of people to suggest that achievement of corporate goal and objective of any organization is direct function of the efficiency of the management based on effective of decision made by him.
1.6 Research Methodology
Method to used in carrying out this research are:-
- Preparation of questionnaire which will be distributed to the staff working in the department.
- Interview will also be conducted.
- Careful study of sales record and other books prepared by sales department together with the accounting records and financial report from these sales records to test and know how the financial report to prepared and assist management in making decision are reward the sales department of the company.
1.7 Plan of the Study
The project concentrates mostly on the relevance of accounting information to management decision making process of which Okin Biscuit Nigeria Limited of is the case study.
The topic is separated into five chapters which will take one after the other.
- Chapter one is the introduction which consist of the Historical Background of the study, statement of the study, methodology of the study, purpose of the study. Plan of the study and definition of terms.
- Chapter two is Literature Review which consist of Briefly History of Literature review and accounting and society, interrelated role of the branches of accounting information, accounting policies decision making process.
- Chapter three is research methodology which comprises of Historical background, statement of hypothesis, population, administration of the data collection instrument, validity sampling design and limitation of methodology.
- Chapter four is data presentation, analysis and interpretation which consist data analysis instrument of analysis, return of questionnaire and test of hypothesis.
- Chapter five which is the last chapter consisted of recommendation, summary, conclusion and Bibliography appendix.
1.8 Definition of Terms
Relation between worker and employee within an organization company.
It is formal meeting between an applicant and staff of organization with Accounting officer. It is conducted on successful applicants before hiring them.
As a process by which scare resource are combined to achieved given ends.
Is process of recording classifying, selecting measuring. Interpreting and communicating financial data of an organization to enable user making assessment and decision.
A managers job consists of planning, organizing, directing and controlling the resource of the organization.
Is the legitimate power of a supervisor to direct subordinates to take action within the scope of the supervisor’s position.
Wages and Salaries Administration:
These are the remuneration policies aimed at compensating the employee for the job done. Precisely, it is to provide incentive for better worker’s to attract and retain enough staff of the required caliber to meet the organization objective.
The process of having the right kind of people at the right time at the right place doing the right thing in organization.
Process of making the choice of right man with right skill and qualification for the right position at the right place in organization.
Process of making is essentially of adopting a particular course of action in preference to alternative possibilities.
Process of recording of financial information and communicates this is to one of another.
5.0 Summary, Conclusion and Recommendation
We can see how accounting is becoming indispensable in our modern society today. Accounting provides information which is vital to economy decision that has to be made by the individual, the company and the government and large companies.
Application of suitable accounting information will entrance decision making and encourage smooth operation which help to a great extent to influence decision making with an organization or company as a whole.
In large – scale business undertaking such as the manufacture and automobiles or the operation of nation wide chain of retail stores, the top executives cannot possibly have close physical contact with and knowledge of the details of operations. Consequently, these executive must depend to a greater even to the information provide by the accounting system.
And management accounting is also part of all organizations management information system for decision making. Managers rely on managerial accounting information to plan and control an organizations operation.
Management accounting provide managers with adequate information’s for decision making and planning, assisting manager’s in directing and controlling operations of the organization.
It is not easy to distinguish cost accounting from management accounting, the two terms are usually together because cost accounting is a part of management accounting and it is specifically concerned with establishing budgets and standard costs with the actual cost of operation, processes, department, product or services.
In order to know whether accounting is relevant in making decision, the researcher now goes further to established the method to measuring the degree of accounting information.
Research designed is the specification of procedure for collecting and analyzing the data necessary to help in identifying the level of or degree of accounting information.
In administration of data collection instrument, the researchers used questionnaire as a means of collecting data to measure the degree of accounting information. Test of hypothesis also used to know the relevance of accounting information in making decision. Among the Four of hypothesis that was test by the researcher, all the test show the reliability of the organization accounting department, the effectiveness of accounting information and need for management to rely on accounting information to a large extent.
Accounting information is thus very relevant to management in making decision.
Accounting data should not be collected by the accounting actions alone. Accounting is the point responsibility of all that use financial data.
Those outside the accounting department should know that what information they can accept accounting to provide and understand how the accounting will go about getting it. To find the cost to manufacture a product, the accountants must know how it is made if he is to supply information for sales, planning, the accountant must understand pricing and marketing problems. The answer will not be found in the “General accepted accounting principles”, written by and for the financial accounting, development of managerial cost data must go beyond accounting. As one writer phrased it, the accountant must get – out or his own department and do a little “Moon lighting in other areas”. Apart from all these, it should be noted that good accounting information to be use in management decision making must posses all the information qualities;
This to the need of accounting information to be current, such accounting information must be made available at the time when needed for the decision making.
This means that accounting information must address the specific problem or decision at hand. Such accounting information must be appropriate to the user’s scheme of activity and to the decision to be made.
It must be sufficiently accurate to be relied upon, and for the intended purpose.
In the case of the study for financial statement through very useful are at limited value to the manager and answered very few of his questions. The executive is more interesting in accounting data, which can be used in planning and controlling, performance or provide information in which may be helpful in choosing between alternative courses of action and caught in a cost price squeeze it is advisable for management to apply more scientific approach to the solution of its problems management with any organization.
The following are reason and the recommendation to be taken into consideration.
- It is necessary for accounting in order to keep his point, of emphasis from asset valuation and Income determination to supplying the quantitative data that managements demand.
- Accounting as a management service, must be qualified and willing to act as a Jack – of – all trades who knows something about everything.
- The Accounting audit department within the organization must be placed in the bands of qualified and competent personnel, who will generate maximum information in effective manner.
- Finally, management of any organization should be willing to source on effective and efficient means of generating accounting information bearing the cost, as this will process and encourage smooth operation within the organization.
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