The Usefulness Of Accounting Report In A Public Company

Project and Seminar Material for Accountancy / Accounting

The Usefulness Of Accounting Report In A Public Company

Chapter One

1.0 Introduction

1.1 Background of the Study

An account report consists of items that are contained in the annual report of a company, these reports are also termed “financial statements” these reports are necessary and compulsory in any business organization, they show the true and fair position of such company at a given period of time. They are usually on annual basis and they provide information to the user of the report to give an informed judgement about a company. these report include the profit and loss account, which show the profit that is and for whole year before and after tax and also a profit is to be retained in the business, they also include the balance sheet which is the statement of asset and liabilities included in the financial report are:

  1. Statement of source and applications of funds
  2. Value added statement
  3. Auditors report
  4. Five years financial summarize (etc)

Not only the management directing the affairs of the company but also by the shareholders in order to measure the performance of the management needs, these accounting reports therefore, accounting has been defined “as the process of identifying, measuring and communicating economic information to enable it users to make necessary decision and judgment, public company as it will be throughout this study will refer to public limited liability whose shares are quoted in the stock exchange market”.

Various users including owners, managers, creditors, government agencies, employees, supplier, tax authority etc are interested in the financial statement of a company. these entire group are interested in the ability of a company to pay its debts as at when due and to earn a reasonable amount of income. These deal concept or objectives of a company are referred to as factors of “insolvency and profitability”. A company who fails to meets the standard expected of him by the creditors on timely basis likely to experience difficult in obtaining credit which will eventually lead to a deadline in its profitability similarly, a company whose earning is lower than those of its competitors is likely to be at a disadvantage in obtaining new capital from stockholders. Accounting report are of great important to any company.

With reference to the specific problem to be addressed as highlighted below in 1.3 it is necessary to provide a premise for the justification of this study unto usefulness of various accounting report to a company.

Since accounting report also known as financial report is part of the annual report that is expected of a company i.e. public judgment will be made, it is necessary to undertake this study in order to know how to interpret the various reports and their usefulness for a long time, it has been compulsory to prepare an annual report. From which we have various account reports used by a company in evaluating itself. Thus, this study will attempt to appraise the usefulness of accounting report to the public company and their various interpretation, it would also attempt to know the usefulness of these accounting reports to various users since their objectives are different.

1.2 Objectives of the Study

The aim of this studies to examine the usefulness of accounting report its affect in a public company and the reason why it is necessary.

Discussion so far in this study have shown the importance of accounting reports to public company in terms of providing information, which will enable the users to give reasonable judgment in the account of the company.

This study will try to ascertain what extents the accounting report have been to help users to give judgment. It would also show various instruments that are used in interpreting that financial statements. This study will also try examine the various information contain in the various accounting report.

1.3 Statement of the Problem

This study is specifically undertaken to examine the contribution and usefulness of accounting report to a public company it should be noted that information provide by the various accounting report sometimes might not be accurate thereby causing a setback in its ability to give informed judgment.

This study will also attempt the examinations of various instruments used to give interpretations to this accounting reports.

In order to show this liquidity position of company and show how solvent it is therefore, it shall examine:

  1. Whether accounting reports are eventually useful to the public company.
  2. Whether the various information’s provided there is factual of factious.
  3. Whether the information provided has a constraint
  4. Whether the tools used in analyzing actually give good result.

1.4 Scope of the Study and Limitation

The focal point of this study is to examine the various accounting reports kept by public company such as Guinness Nigeria Plc, lighting the usefulness of these accounting reports and there characteristics. The scope of this study restricted to it Lagos office of Guinness Nigeria plc. This due to the fact that they keep the same accounting record.

This study will not deal with anything beyond accounting report and its usefulness. Tool used in interpreting these accounting reports will limit to be restricted to the barest minimum it will limit to the lagos office due to constraint of time and the distance of other branches of Guinness Nigeria plc. In Benin, Aba etc.

1.5 Significant of the Study

The study is significant in as much as it attempt to achieve the objectives spelt out in (section 1-4) in other words the significance are:

  1. To know the various accounting report used by a public company.
  2. To know the extent of its fullness
  3. To know the report are being evaluated for an informed judgment to be given by the users.

1.6 Definition of Terms

In this study various terms will be used in other to give a true knowledge of the research work these terms are analyzed below.

a. Expenses:

This is cost, which has being expenditure in the production of revenue referred to as an overhead cost.

b. Balance Sheet:

This is a statement of account which show the true financial position of the business entity in a giving the detailed summary of the assets and owner equity for a given period.

c. Dividend:

This is referred to as the contribution paid to the shareholders as a specific amount per share of capital stock.

d. Financial Statement:

This is an accounting report which summarizes the financial position and operating result of a company.

e. Owners:

This is the amount of owners operation of transaction which has been net investment plus profits from successful retained in the business.

Chapter Five

5.0 Summary of Finding, Conclusion and Recommendation

5.1 Introduction

Having gone through this research work one would believe that an accounting report is the backbone of a public company and necessarily in any public company, the reason being that, it shows, the present financial position of a company and it future prospect.

The accounting report gives the owners of business (i.e shareholders) an opportunity to see at a glance, how the management has been doing with their company, it also aids the management in making or taking a stand in crucial financial decision affecting the company.

5.2 Summary:

Accounting report are the panel of business enterprise that is they constitute a report on managerial performances, attesting to managerial success or failure and flashing warning signals of impeding difficulties.

This research study has made it clear that one must incest and inner working of the accounting system and the significance of various financial statement, also to a user, with knowledge of account ting. Accounting report tell us a great deal about a company.

This study also deals with the definition accounting, public company and all other relevant terms, it is also based on the review of available literature on the purpose and objective of accounting reports, its uses and users, it also deals with the role of profitability and solvency in any financial information to decision making.

This study also provide a number of different group that are interested in the financial affairs of a business either for protection sake or as an aid in decision making, examples are banks management credit investors, customers and so each of these groups has different need and accordingly each tends to concentrate on particular aspect of the company’s financial picture, this study also explain the computations and uses of ratios that explains the computations and uses of ratios that are widely used in financial statement analysis and explain what each ratios attempts to measure.

5.3 Conclusion

The interpretation of published account is not and cannot be an exact sense, accounting report are used to communicate useful financial information to interested parties, if there objectives are not met, the statement serves no purpose but careful analyze and interpretation made by the users of financial statement which often clarify and to their usefulness aid communications, it is therefore essential that the user become stalled in the available techniques for analyzing financial statements.

Ratio should be used with caution and should be computed from comparable data if inter – company or inter – period compares are to be made. However, at this junction; it is deemed that this study has achieved objectives despite the little information its research on.

5.4 Recommendation

After due consideration and analysis so, these recommendation are hereby suggested. Although company must maintain sufficient stock qualities to meet demand for trading, it is however describe to keep amount invested in stock to minimum since stock in excess of the needs of business reduce solvency typing up funds.

Excess stock can also cause increase in the amount of storage and other related expenses further reducing fund to be used for better advances debtors account yield hence, it is described to be the amount interested in item at minimum level. Therefore, enough cash will be available to improve solvency to purchase adequate materials for a lower price and to pay dividend to share holders or for other purposes. Although debt is advantageous to shareholders in these ways.

  1. They can retain control of the firm
  2. Their earning will be magnified when the firm earns a rate higher than the interest rate on the harvested funds, hastily accounting reports prepared by a company should meet up with the standard set in section 335 (1) of the company’s Allied Matter decree 1990 and must give a true and fair view.

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