THE IMPORTANCE OF PROPER ACCOUNTING MODERN DAY BUSINESS

By

NZEI VICTORIA OSOGBUE

Presented To

Department of Accountancy

TABLE OF CONTENT

Title page

Approval page

Acknowledgement

Dedication

Table of content

CHAPTER ONE

Introduction

1.1 Background of study

1.2 Statement of the problem

1.3 Significance of the study

1.4 Definition of terms

CHAPTER TWO

Literature review

2.1 The proper books of accounting in business

2.2 The necessity and the result of proper accounting in modern day business

2.3 The impact of proper accounting in Nigeria business

CHAPTER THREE

3.1 Summary of findings

3.2 Recommendation

3.3 Conclusion

Bibliography

CHAPTER ONE

INTRODUCTION

In this day of trade and commerce, many enterprises are springing up. For instance.

• Sale proprietorship
• Partnership
• Corporative, limited liability company

Being established for the purpose of achieving objective as it related to their businesses.

These businesses have one thing in common and that is they all employ the factors of production land, capital, labour and entrepreneurship for the achievement of their various objectives. These objectives could be effectively and efficiently achieved if these very important tools are properly managed. A good and efficient business done not end with the profit made but ought to be sustained to ensure a more regular flow of income and subsequent profit

The sustainability of a good business depends on a number of factors the location of the business (which includes the land) environment, proximity to the required raw material and the targeted end users, and more importantly, funds. A good business can only thrive if the effective human resources are employed. Therefore it is necessary to ensure that a proper qualified workforce is employed to enhance productivity.

Another factor that will enhance the productivity and profitability of a good business out fit is proper accounting. If proper accounting procedures is employed in a business, waste of funds. Time and materials will be minimized. Although it is the duty of every employee in a business outfit to imbibe the culture of maintenance and accountability, the accountant has a greater put to play in this aspect of the business.

Proper accounting is the hallmark of any business and it cuts across every segment of the business from the security gate to the office of the Chief executive. In modern day business proper accounting is very beneficial and rewarding. It appraises, revaluates and checks the amount of capital invested, as well as revenue and expenditure that occur during the business financial year. With this profit and loss account is brought also into consideration, where proper accounting has not been introduced in a business, there is bound to be some irregularities. The income and expenditures would not be accurately recorded thereby making it difficult for the actual profit to be ascertained.

The importance of proper accounting in modern day business cannot be overemphasized because it definitely has a positive effect of the workforce. The work force will be more careful, cost conscious and committed to the business, profit will increase and waste minimized.

1.1 BACKGROUND OF THE STUDY

Business is the exchange of goods, services and money on an arm's length basis, that result in mutual benefit or profit for both parties involved. An individual engages in business because he or she believes that the rewards or possible benefit of business are greater than the risks or possible future sacrifices of business.

Accounting is often said to be the language of business it is used in the business world to described the transaction entered into by all kind of organization. The actual record making phase of accounting is usually called bookkeeping and he use to which these record are pt, their analysis and interpretation. An accountant should be interested in relationship between the financial results and the events which have created them.

The owners of a business would want to know

v Whether or not the firm operating at a profit

v Where or not the business will be able to meet its commitment as they fall due, or have to close down owing to lack of funds

v Whether documentary evidence of the company business activities can be maintained

The tool for a successful proper accounting report called financial statement that describes the financial position of a business and the result of its recent operation.

A complete set of financial statement for a business include fair related accounting report:

A balance sheet

This is the statement that shows the financial position of the business at a specific date by describing its financial resources and obligations

Income statement

This is the statement that reports the company's profitability over recent period of time

A statement of retaining earnings

This explain changes in the amount of the owners equity (investment in the business) over the period of time covered by the income statement

A statement of cash flows

This summarize the company cash receipts and cash payment over the period of time covered by the income statement

1.2 STATEMENT OF THE PROBLEM

In the process of business transaction, some problem have arisen that have highlight need for proper accounting procedures to be introduced in modern day business.

This problem includes

v The invalidity of the business transaction

v Decline in the business objective

v Irregularities in the book of ledger

v Inability in computing a financial statement

v Decline in the business operating at a profit

v Error and fraud in the business transaction

1.3 SIGNIFINANCE OF THE STUDY

The significance of this study is to make contribution to the achievement of the people venturing into business or that are already in business by creating awareness to the need for and importance of proper accounting in their business.

It is also hoped that the stud will enlighten the propel as well as broaden the business horizon.

This study will also help all stake holders in business to effectively tackle most of the problem inherent in business.

Finally, this study will be of immense benefit to the student conducting similar research work on the same or related topic.

1.4 DEFINITION OF TERMS

Financial position

The identification of the company financial resources and obligation of a specific date.

Book keeping

The science and art of correctly recording in the books, all those business transaction that result in a transfer of money or money's worth within or between entries

Errors

Unintentional mistakes in financial statement whether of a mathematical or clerical nature or due to oversight or misinterpretation of relevant facts.

Fraud

Irregularities involving the use of criminal deception to obtain an unjust a illegal benefit

Irregularities

Intentional distortion of financial statement for whatever purpose and the misappropriation of assets, whether or not accompanied by distortion of financial statement

Profit

The difference between the amount earned and the amount spent in business.