CHAPTER ONE
DEFINITION OF TERMS
Financial Accounting: Financial accounting is concerned with the recording of transactions for a business enterprise or other economic units and the periodic preparation of various reports from such records. Financial accounting then can be said to be a systematic gathering, identifying, summarizing and reporting of business transactions in monetary terms such that it provides information which permits informed judgment by the users of such information. Information: These can be said to be facts needed or received by a person, or group of persons which is or will be useful to them. Management: Management can be defined as the rational selection of courses of action to optimize the inter-relationship of a material and money for the survival and growth of the organization. It can also be regarded as the process of getting things done through people. Decision-Making: Decision making can be defined as identifying alternatives, evaluating such alternatives and choosing from such alternatives. Decision making can be viewed as the very fabric of which organized activity is made.
INTRODUCTION
1.1. BACKGROUND OF THE STUDY
The attainment of this objective necessarily requires both the identification as well as the disclosure of an adequate amount of information considered relevant by the users. Financial accounting information therefore, is the information derived from the financial accounting report. The essence of this information is for management and other users to make decisions. Therefore, the accuracy of decision making depends on the effective and efficient design of management information system. The accounting concerned prepares the financial accounting information in such a way that will enable users to derive maximum information for their use. Decision making itself can be described as the art or science of choosing among possible managerial actions. The art or science of decision making enable management of a business to choose from among a range of already analysed and evaluated alternative. Two classes of decision makers can be identified in respect of the use of financial accounting information. These are the external users and the internal users. Management represents and the internal users include creditiors, shareholders, government agencies, trade unions e.t.c. Managers are the major users of financial accounting information need this information to plan. The impact of financial accounting information on the management of any business cannot be overlooked, though the extent of such..
1.2. STATEMENT OF THE PROBLEM
Managers of certain businesses do not have sound accounting systems to enable them monitor operating expenses and revenues. They do not need the wearings communicated by financial accounting information. This ignorance or lack of financial accounting information, may lead to the non-effective and inefficient accomplishment of the firm’s objectives. It is only through accounting information that managers and external users get a picture of the organization as a total entity. Managers who fail to realize this do not appreciate an accountants analysis in respect of financial accounting information generated. This may lead to poor decisions being taken and it may affect the profitability and performance of the organization. Some organizations, due to low financial layout or lack of adequate planning or ignorance may not employ expert hands needed and this causes the effect and importance of financial accounting information on decisions taken not to be noticed or gained by the organization. The researchers in this study will seek to show the information management can derive from financial accounting and their usefulness for decision making in business.
