PROPER ACCOUNTING INFORMATION AS A TOOL FOR MANAGEMENT DECISION – MAKING

(A CASE STUDY OF ALO ALUMINUM)

By

NNAMANI SAMUEL CHIME

Presented To

Department of Accountancy

TABLE OF CONTENTS

Title Page

Approval Page

Dedication

Acknowledgement

Table of Contents

List of Table

Abstract

CHAPTER ONE

1.0 Introduction

1.1 Background of the Study

1.2 Statement of Problem

1.3 Purpose of the Study

1.4 Scope of the Study

1.5 Research Questions

1.6 Hypothesis

1.7 Significance of the Study

Reference

CHAPTER TWO

2.0 Review of Literature

2.1 Accounting Principles, Concepts and Convention

2.2 Accounting Information System

2.3 Accounting of Trading and Non Trading Organization

2.4 Public Sector Accounting

2.5 Concept of Management, Management Decision - Making and Accounting

2.6 Summary of the Related Reviewed Literature

References

CHAPTER THREE

3.0 Methodology

3.1 Research Design

3.2 Area of Study

3.3 Population of the Study

3.4 Sample and Sampling Procedure

3.5 Instrument of Data Collection

3.6 Validation of the Instrument

3.7 Reliability of Data Collection

3.8 Method of Data Collection

3.9 Method of Data Analysis

Reference

CHAPTER FOUR

4.0 Data Presentation and Analysis of Results

4.1 Summary of Result/ Findings Graphs and Tables

CHAPTER FIVE

5.0 Discussion, Implication, Recommendations and Conclusion

5.1 Discussion of Results

5.2 Conclusions

5.3 Implications of the Results

5.4 Recommendations

5.5 Suggestions for Further Research

5.6 Limitation of the Study

CHAPTER ONE

10 INTRODUCTION

11 BACKGROUND OF THE STUDY

The owner of a business naturally wishes to run his business as efficiently as possible One of the coordinal purposes of keeping accounts is to enable him to do this His accounts should tell him the exact cost of what he is selling, the exact amount of each expense which is involved and the exact revenue of the business

With such information, the owner of the business can make comparison from year to year Comparing the profit this year with the preceding years and investigate the causes of any difference This is, by making comparison of the expense incurred

By studying his accounts in this manner, the business manager can now formulate a business policy He may, for instance take a discussion whether to rise or lower prices of his products; to embark on advertisement or not To change the method of production or to change the organizational structure

To ordinary man in the street, Account means story, explanation, or report of money received and spent

In the remote past, the actual record - making is called "Book-Keeping" However, accounting today extends beyond book-keeping

According is a discipline concerned with the recording, analysis, and forecasting of income and wealth of business and other terms, the flow of economics values between or within economic entities

According to (Wood's 1982), "accounting is said to be the language of business" At a given time, Accounting made it possible for a businessman to discover;

The value of his in-put and out-put

The available cash/bank balance

His debtors and creditors

Value of Assets

Whether profit or loss

The financial position of the business

According to (White Head 1979), "Accounting is the art of controlling a business by keeping accurate book keeping records, preparing from those records certain statistics called accounting ratios, using those ratios to dictate financial difficulties before they become serious, so that counter measure may be taken"

However, it is necessary to review the definition of the objective of accounting in line with the present role expected of accounting discipline The main purpose of accounting centred on the provision of potentially useful information for making economic decision that capable of enhancing social welfare

Stewardship Accounting

It is the duty of management to ensure that owners wealth are safeguard from theft, embezzlement and also report on the periodic result of owner's business

Financial Accounting

Financial Accounting is confined to preparation of financial statement for the use of outsiders like debenture holders, creditors, banks, and also for the information of shareholders, to show the manner in which the business operation are conducted during the specific period

According to Osisioma (1975), "accounting is a way to give management the financial information and controls it needs to run a profitable business or an efficient organization" It is a system of principles and techniques that permits the recording, classification accumulation, presentation, and interpretation of financial information so that pass performance, present condition and future planning can be evaluated The best form of comparison involves the use of carefully assessed standard of the results, which ought to be achieved correctly

Financial accounting involves in furnishing of information to outsiders who have the right to get the same under certain well defined and accepted principles and rules

Management

Management is the process of procuring, combing, utilizing or allocating an organizational in-puts-men, material and money 3M, by planning, organizing, directing and controlling for the purpose of achieving the objective of a business

Management accounting therefore is an integral part of management that concerned with identifying; presenting, and interpreting, information required by management of all levels for decision making

These concerns with data gathering analyzing processing, interpreting and communicating the resulting information for use within the operation so that management can more effectively plan, making decisions and control operations

Managing a business is a matter of decision what should be done, seeing to it that the means employed in the business to do it

Decision-making is one of the main functions of management, therefore, provision of vital information needed to asset all levels of management in planning and controlling the activities of commercial enterprise

Cost Accounting

Cost Accounting provides information for both management accounting and financial accounting; It measures and reports information that relates to the cost of acquiring or consuming resources by an organization

According to institute of cost and management (IMA) defined cost accounting as the "application of accounting and principles, methods and techniques in the ascertainment of cost and the analysis of savings and/or excess as compared with previous experience or with standard"

Cost accounting provides management with information about cost of material, unit cost, production cost Whether to produce or sell product 'A', should a particular product be made or bought The effect (financially) increment or reduction in in-put (variable costs) All these call for decision-making which lies on accounting information

Social Responsibility Accounting

This involved with the consideration of the social effects of business decision as well as their economic effects on the society as a whole

Accounting data is vital tool for all these responsible for taking decision in our business organization It is immaterial whether the business in question is a private or public venture The scale of operation does not matter also However, the tool becomes increasingly relevant as the manager's responsibilities broaden with business expansion and complexity

Proper accounting is in no doubt enhances effective management decision-making Money accounting ideas and data help the management in performing its functions

This study concentrates on the proper accounting information in management decision-making in public liability companies especially Alo-Aluminium Company Enugu

Every establishment has its peculiar structure and its designed duties for the customers In view of this therefore, proper accountability is required for the coverall growth of the business

The major role of accounting be it government or private is to provide useful information for assessing management's performance and stewardship

However, there some questions which the managers or owners of the business would like to know -

Whether or not the business is operating at a profit or not

Whether or not the business will be able to meet its obligations as they fall due Related laws and regulations were followed

The above questions required positive answers Some companies in spite of availability of 3m (Labour, Materials and money) still performed below the expectation The reasons for their failure include lack of effective management information and improper accounting records in the business operation

In summary, the kind of information which account provide is useful to both managers, owners, investors, bankers, lawyers, even to the house wires who practice door to door petty businesses

12 STATEMENT OF THE PROBLEM

These include: -

1 Improper accounting records and report to the public on the financial position of an organization

2 Improper execution of accounting information in an organization

3 The primitive system of accounting

4 Inability to ascertain the financial position of organization

5 Improper guide to future policy

13 PURPOSE OF THE STUDY

Based on the above problem defined, the following are the objectives

1 To find out the proper ways of recording and reporting the financial position of an organization to the public

2 To establish the accounting information properly in an organization

3 To ascertain the modern system of accounting

4 To find the performance of an organization in terms of profitability or solvency

5 To determine what future will look like

14 SCOPE OF THE STUDY

In this study, the scope on the proper accounting information as tool for management decision-making is control on Alo-Aluminium Ltd, Enugu base

15 RESEARCHER QUESTIONS

To what extent will proper accounting record and reports be helpful to the public to know the financial position of an organization?

How does modern system of accounting information helps in an organization?

1 To what extent does accounting helps planning and control in an organization?

2 To what extent does account data play in the performance of an organization?

3 How useful is accounting information to a business in terms of profitability or solvency?

16 HYPOTHESIS

Hypothesis is defined as a guess that are possible solutions to a problem Hypothesis test events to determine the types of material may be viewed, on the other hand, is a tentative solution of the research problem

Therefore, one hypothesis will be tested both in null and alternative forms

The alternative hypothesis is stated below: -

Ho for null and Hi for alternative

Hi: - There is significance relationship between senior and junior staff of Alo Aluminium Enugu, on the need for proper accounting information in their establishment

H0: - The null hypothesis is that there is no relationship between senior and junior talking the problem of proper accounting information in their establishment

16 SIGNIFICANT OF THE STUDY

The study will highlight on the for controlling a business by way of keeping accurate records of a business transaction; preparing from those records useful information for management use

According to White Head (1977) "According is the art of controlling a business by keeping accurate -keep-keeping records, preparing from those records certain statistics called accounting ratios, using those ratios to detect financial difficulties before they become serious, so that canter measure may be taken

The roles of manager (Financial) is considerably different from what it was in the past and will no doubt continue to change manager of various business enterprises must grow to accept the changing environment and master its challenges

Financial functions of raising and use of money has a very significant effect on the other functions One of the primarily functions of managers is to procure funds, allocation of capital, management of assets and valuation of the form in the overall market

Probably, there are two main questions that the mangers or owners of the business want to know-firstly whether or not the firm is operating at a profit Secondly, whether or not the business will be able to meet its commitments as they fail due According idea and data produces answers to the above questions

Financial manager (accountant) is duty bound to prepare his accounting information in compliance with the status and standard set by the accounting professional bodies The main information supplied b the accountant is known as cooperate reports, financial statement, or final account He supplies potentially useful information to the investors, creditor, employees, trade unions, and related groups, consumer, government and its agencies, business and financial analysts as well as management

The whole of financial accounting is based on the accounting equation The accounting equation is expressed in financial statement called the "Balance sheet" Accounting is responsible for directing, controlling co-ordinating the work of the book-keeping staff

REFERENCES

FAVELL AJ (1980); Practical Book-Keeping and Accounting University Tutorial press Ltd London

Wood F (1982); Business Accounting One UK, London Group

White - Head (1977); Principles of Accounting London, Core and Wyman

Etuk - Udo JS (1976); Principles of Accounting for West African London Oxford University Press