IMPACT OF ACCOUNTING INFORMATION IN MANAGEMENT DECISION MAKING

 

CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY

The efficiency and of the operations as well as the overall success of a business depend to a large extent on the quality of information available to the management information help management in making decisions about the allocation of scarce resources between completing ends so as to remain in business and also for the growth of expansion of the firm.

The business environment is a changing one and for business to survive in such rapidly changing environment, management must keep abreast with information that will enable it to plan for the attainment of pre-determined objectives. A plan is generally regarded as a preparation for action.

Planning involves causing things to happen in a desired or particular way, which other wise would not have happened. The planning process includes: The identification of goals of the business based on a detailed analysis of feasibility with in the content on the policies and programmes for achieving the planned goals. Others are provision of suitable organization structure and identification of the desire type of personnel to implement the selected programm. Also to monitor the and result so as to measure actual performance in relation to plan goals of achievement and there by improve the entire process if the need arises, information is needed for the attainment of the organizations goals or objectives.

The accounting function helps in the accumulation of accounting data, which helps management in the planning process. It also provides management with financial tools for projecting into the future. In order to make the desire projection for planning purposes, management needs three basic types of accounting information which are integrated in different stages of the planning process. These are score keeping information, attention directing information and problem solving information.

The score-keeping information involves the accumulation and allocation of data ex-post for the purpose of product costing income determination, performance appraisal and positive evaluation. Attention directing information involves high lighting and investigating of variances for connective actions. This is done by comparing ex-post results with decisions implemented ex-ante and it is useful in the evaluation stage of planning. Attention directing information is concerned with the control function principle of management by exception it brings out problem solving information to be looked into for corrective actions. The problem soling information is useful in the implementation stage of planning, since it focuses on analyzing and recommending the best course of action among many alternative courses. It is closely associated with management decision making process and consists of non-routine and ad-hoc and special decision.

The aim of any business is to remain sound decision making in the back bone of any successful business and a through analysis of accounting information by management can improve her decision making.

Accounting provides information that is helpful in making decisions. Most important decisions, regardless if types of endeavour involved, are based, in part, upon complex financial considerations. Accounting provides an important information base and a particular analytical orientation that helps the management assess the future financial implication and potential out comes of various alternations that are considered.

Accounting reports the economic effects of past decision is made and implementation starts, significant and often subtle financial economic effects on the entity occur. The evolving effects of past decisions must be measured continuously and periodically reported so that the management who are the decision makes can be informed of continuing and newly developing problems, and successes, over time and with these information, management can then make decisions concerning the future.

Management also needs accounting information because it supply information useful in judging its ability to utilize enterprise resources effectively in achieving the primary enterprise goal

Decision taken by management is of double effect. These decisions will reflect their performance and secondly, will also effect the decision of external user of financial accounting information. If the decision of management affect the decision of the business adversely, the investors will be unwillingly to invest in the business, production will not lend their resources (money) and the government will also classify the business among those not making profit

Accounting information is of paramount importance in decision making. The problem is; is accounting decision? This is question that the researcher seeks to answer.

 

 

• STATEMENT OF PROBLEM

An effective information system is very important for the functioning of any business studies have shown that there are increasing demands of accounting information by both external users and internal users (management) of the information for making decision. The substance and growth of any business enterprise largely depends on its management decision and information is considered as a vital tool in any business situations will reflect their performances and also affect the decision of external users of the financial accounting information, tend to make sure that their decision affect the business positively of which accounting information supplies them with vital information in making their decisions. the study is aimed at assessing and evaluating the extent to which accounting information had been a tool in management decision making

• OBJECTIVE OF THE STUDY

As aforementioned above, the business environment is a changing one and for a business to survive such rapidly changing environment, management must keep abreast with information that will enable it to plan for the attainment of pre-determined objectives management needs financial or accounting information in order to make effective decision. Management decision is very important for the success of any business. A through analysis of accounting information can improve her decision-making. The purpose of study there is:

1. To determine whether management uses accounting information for decision making


2. The extent to which accounting information influences her decision making.


3. To ascertain the extent to which adequate use of accounting information has contributed to reduction of poor management decisions


4. To ascertain the effect of improper accounting record’s in decision making in achieving organization’s objectives.


5. To make recommendation (s) which might assist the management imperfection decision making

 

• SIGNIFICANCE OF THE STUDY

This research work would be of immense significance to the following: -

THE MANAGEMENT: The quality of her decision-making would be improved as a result of the knowledge acquired form this research work.

THE EXTERNAL USERS: The decision of management affects the decision of the external users as stated previously, therefore an improvement in management decision will positively affect theirs.

THE ECONOMY: This work will help to improve the national output and thereby national income. The is because of the apparent reduction in adverse decision and the increase in effective decisions, which will be achieved through adequate utilization of financial accounting information

RESEARCHERS: Other researchers on the same r similar topic will fined this research work helpful, as it will form a base of review of related literature and also a stepping store for future researcher.

• SCOPE OF THE STUDY

SCOPE: The work will find out the impact of “Accounting information as food for management decision making the researcher will carry out a comparative study of University of Nigeria Teaching Hospital Enugu. Any other reference to other materials, items activities, periods, is just for purposes of clarity and vivid understanding of the subject topic and not within the scope.

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