THE IMPORTANCE OF ACCOUNTING INFORMATION IN MANAGEMENT DECISION MAKING PROCESS 

THE IMPORTANCE OF ACCOUNTING INFORMATION IN MANAGEMENT DECISION MAKING PROCESS (A STUDY OF AKWA IBOM WATER COMPANY LTD, UYO)

CHAPTER ONE

1.0     INTRODUCTION

In every business organization, be it a profit making or a non-profit making organization, information on the normal day to day activities of the business is of paramount importance. However, business information comes from various diversities. It could be from:

  1. Internal to external (where the information from internal communicated to the outsiders).
  2. External to internal (where the general reaction of the outsiders are communicated to the internal that is the business organization).
  3. Within the organization (where business information comes from the top level to the lower level management, from one department to another department in the same organization).

The various diversities of business information help the business organization in different ways. Information from external to internal for examples from customers to the firm helps the firm to increase from customer to productions, how and when to render certain services to its customer’s information from internal to external helps potential customer to know the existence of such a business organization and also to allocate their income towards the product (goods and services) of such business organization. Also in an organization like a limited liability company, information on financial position is made available to the public, this can motivate potential investors to invest into such a company if such financial statement create a positive impact on the potential customers, this can also retain other investor in organization.

According to Storey, R. K and Story, S. (1998) page 1, “the principles role of financial accounting and reporting is to serve the public interest by providing information that is useful in making business and economic decision that information facilitates the efficient functioning of capital and other markets thereby promoting the efficient and equitable allocation of scarce resources in the economy.

Upon the many business information that are available, accounting information was selected for this research as all other business information such as production information, advertising/sales information, legal information are combined together to bring a more realistic information that indicates the general inflow and outflow of resources in organization.

Finally, it is worth mentioning here that accounting information unites workers as their regular contributions are made known to them.

 

1.1     STATEMENT OF PROBLEM

Most business organization in our community do not keep records of timely transaction of their business, this results into adverse effect on the organization but do not based their decision, the organization lack the knowledge of deciding whether to make or buy their products for sales (in the case manufacturing organization), when and where to buy their goods, whether to employ new worker, old workers, whether to grant credit or not to customers and also where to borrow money from bank or not.

The above problem will kindle the activities of the organization and hence become retirement of workers, inability to pay dividends and salaries, retirement of competent workers and sometimes, a total fold-up of all the activities problems, the researcher would want to examine the importance of accounting information that would be found necessary to develop the decision making process in various organization.

1.2     OBJECTIVES OF THE STUDY

The objectives of the study are as follows;

  1. To find out the problems associated with non-keeping of records of business transaction in Akwa Ibom Water Company Limited, Uyo.
  2. To find out the roles of government towards monitoring the mandatory keeping of accounting records in Akwa Ibom Water Company Limited, Uyo.
  3. To recommend for future research on the study Akwa Ibom Water Company Limited, Uyo.
  4. To find out the roles of record keeping in decision making in Akwa Ibom Water Company Limited, Uyo.

1.3     RESEARCH QUESTIONS

  1. What roles does record keeping of business transaction play in the organization?
  2. Does government require the company to submit its accounting reports at the end of a certain period?
  3. What information does accounting report for decision making in the organization?
  4. Could there be any penalty for non-submission of accounting report to government at the end of the started period?

1.4     RESEARCH HYPOTHESIS

H1:    Record Keeping will lead to sound decision making

H0:    Record keeping will not lead to sound decision making.

H1:    Good record keeping will lead to maximum productivity.

H0:    Good record keeping will not lead to maximum productivity.

 

 

1.5     SIGNIFICANCE OF THE STUDY

The study on the importance of accounting information in management decision making process has a great impact to organizational existence. The result of this study could benefit the organization involved, employees of such organizations, investors and potential investors of such organization are at the safer side on having understood this study.

The government is not left out here as the result of this study concerned government parastatals to implement and make it mandatory for all business organization to keep records of their timely transactions not for purpose of tax alone but also for the purpose of knowing their current level in the business.

Again too, this study will generate unto future researcher the urge of making further research on the subject matter, this will further change the study to meet with the changing environment.

 

1.6     SCOPE OF THE STUDY

The scope of this research is accounting information and its importance to management. The researcher will use “importance of accounting   information in management decision making process”.

This project topic is centered on internal reports (IC) the managerial and financial accounting report and the research study area was limited to Akwa Ibom Water Company Limited, Uyo because of the following factors:

  1. Time Factor: The time allocated for completion of this study was too short.
  2. Financial Factor: The limited source of finance, but unlimited usage also posed the problem of a wider coverage of this study.

 

1.7     LIMITATIONS OF THE STUDY

Accounting information system is a general terms used through the world, but for the purpose of this project everything will be based on managerial perspective, which the researcher will find out some problem and possible solution to them.

The first one was the time factors; the time to carry out research for the material and necessary data to be used in the project was so short that the research could not travel to much availability of the needed materials. Another limitation was that of finance as it is well known, this limits the availability of materials.

1.8     DEFINITION OF TERMS AND ACRONYMS

In order to facilitate the understanding of this study, it is important to define some of the terms used in the study.

  1. Business Information: Facts or details about the activities of information.

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