Real Chapter One

CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
During independence(1st October 1960), Nigeria joined the committee of nation,

with the hope and aim for a better tomorrow. We were almost self-sufficient, and
of course able to feed ourselves. Therefore our aims and hopes seemed
impossible. It got to the extent, it looked as if we keep going deeper and deeper
into the woods. The agreement is that it has been bad for Nigeria, Mainly because
of the adverse economic condition prevailing in the country where many
businesses have closed, shops and even financial institutions are being declared
distressed at high rate. Businesses organization that are yet to be submerged or
that want to continue to maintain progressive success, employ all kind of
strategies and also implement new policies. Some can increase price, engage in
aggressive marketing and also adopt promotional tools etc. whereas others also
go for an odd combination of activities and even undergo different kind of small
business to survive. Any business organization or individual that wants to survive
must endeavor to make the right decision at all time. The season of mile of thumb
are long gone. 0kafor (2000)
The price of any consumable item from rice and bread to radio and book not to
mention petrol has been soaring in geometric proportions over the year. The
Nigeria economy is truly in distress. These compounded and complicated
entanglement are the problem of the organization in relation to the effective
planning and decision making processes. stagflation, taxation, economic and
political problem are some of the factors and major problem which affects
information and decision making. The future orientation is what most company
and bank get from making accounting decision, the computation and
interpretation of analytical ratios from financial statement allows bank to
determine their operational trends and make provision for basis for management
decision making.
Other uses of financial analysis are in making financial decision and achieving the
goal of sustainability determines compliance with regulatory requirements.
Financial analysis can be seen as an investment that yield positive returns in the
future on how decision will be made, and how to manage the finances to achieve
the strategic goals of the institution through decision making. Most individuals
think that accounting is a highly technical field which can only be understood by
professional accountants; actually nearly everyone practices accounting in one
form or the other.
In modern times, management requires a wide variety of information to

successfully accomplish its aim, goals and objectives. This information is mainly
determined by the element of uncertainty about the future and lack of knowledge
about the present. Some of these decisions are of strategic importance having a
large impact on the business, others can be seen as routine operational
decision.Drurry, (1973).
Subsequently accounting information is based on laws and regulations governing

and overseeing the handling of financial information contained in the financial
reports of organization. Making the right decision depends on the possession of
detailed, appropriate, accurate and up to date information provided and
presented in a meaningful way. This study, is set out to examine the contribution
of sound accounting system in providing management with financial and other
information basis for dealing with decision problems that arises from their
organizational operations.
1.2 STATEMENT OF THE PROBLEM
Fundamentally, the nature of manufacturing business compels or drive it to carry

out a great deal of book-keeping based on accounting principles and information
provided with the indefinite increase in the number of consumers of
manufactured products. It has become necessary to devise a systematic means in
handling the resultant book-keeping and accounting activities. A lot of criticism
has always been made about the service of the organization, consumers complain
of low quality product while employees complain of lack of promotion,
inadequate salaries, lack of training etc.
Furthermore, the major challenge facing every financial institution\ business

organization of today is market relevance, on-going fundamental changes in the
global politics, economy and emerging competitions particularly, challenges
proper adequate and contemporary accounting information for management
decision making. The company itself tries to coordinate all these challenges
effectively and efficiently so as to minimize and reduce any anticipated and
unanticipated pitfalls Edward (1976).
Imagine a good and effective accounting system is applied or implemented

properly by the manufacturing organization, it's obvious that the difference will
be clear. The Improper attention to the accounting system and mishandling of
accounting information has birthed the following problems which can be
regarded and seen as the specific problems of this study:
1. The inability or capacity of accounting information to perform the required

basic functions of profit maximization and cost minimization.
2. To sense and understand the difficulty in extracting, gathering and utilizing of

accounting information.
3. The accounting information gotten from accounting departments contribute
little to the decision making of the organization at large.
4. Poor organisation and control of business activities and
5. Unsatisfactory service to its customers.
1.3 OBJECTIVES OF THE STUDY
The objectives of the study are as follows;
1. To confirm, if there has been a problem in generating and utilizing of

accounting informations, that are necessary for management decision making.
2. To determine the level in which the accounting information has effectively

performed or carry out the preferable basic roles of the organization, such as cost
minimization, proper allocation of resources and improvement in production.
3. To ascertain the degree or rate, to which accounting information gotten or

generated by the account departments has contributed or made impact to the
decision making process of an organization.
4. Examine the impact of accounting information on the quality and timeliness of
decisions.
5. Assess the factors that mediate or moderate the relationship between

accounting information and decision outcomes
1.4 RESEARCH QUESTION
1. To what extent does the accounting information generated by the account

departments contribute in the decision making process of the organization?
2. What are the problems or limitations associated with generating and utilization
of accounting informations necessary for management decision making process.
3. To what extent, does accounting information been improved effectively

performed or fulfil the basic roles of cost minimization, proper allocation of scare
resource and improvement in the production.5
1.5 RESEARCH HYPOTHESES
HYPOTHESIS ONE
Ho: There are problem in generating and utilizing accounting information

necessary for management decision making.
H1: There are no problems in generating and utilizing accounting information
necessary for management decision making.
HYPOTHESIS TWO:
Ho: Accounting information generated by account departments has not

contributed in decision making process.
H1: Accounting information generated by accounts department has

contributed in decision making process.
HYPOTHESIS THREE:
Ho: Accounting information has not improved effectively performed or fulfil

the basic roles of cost minimization, proper allocation of scare resource and
improvement in the production.
H1: Accounting information has improved effectively performed or fulfil the

basic roles of cost minimization, proper allocation of scare resource and
improvement in the production6
1.6 SCOPE OF THE STUDY
This research focuses on exploring the influence of accounting information on

decision-making within a diverse range of organizations across different
industries. The study will examine the role of financial statements, management
accounting reports, budgeting information, and other relevant accounting data in
shaping decision outcomes in an organization.
The research cannot treat all aspect and kinds of accounting information because
the field is simply too wide. So only those relevant to these studies were dealt
with. Need- ratio analysis, cost-volume- profit analysis, absorption and marginal
costing, the contribution margin, standard costing and variance analysis, linear
programming are also part of what the study encompasses. This study covers
between 2010- 2014.
1.7 LIMITATIONS OF THE STUDY
The availability of correct and up to date data is not easy, even when available;
one still encounters unnecessary bottlenecks due to our socio – cultural
background as regards disclosure of information and bureaucracy. So this
constituted an impediment to this research work.
Financial and time constraints were seriously encountered by the researcher.

Computational procedures of various accounting information or tools are outside
the scope of the work. However, those deemed necessary may be treated. It is
impossible to cover all the companies, firms and other business outfits in Nigeria
as a sample, two companies in kogi state were studied and inferences made there
from. Deliberate effort is being made to have a worthwhile study with sufficient
validity and reliability. This work should not be viewed as a final solution to effect
of accounting information on decision making process. There are limitations on
resources for reference purposes especially responses on collection of data, many
respondents give bias responses probably because of job protection, officer’s
name and image protection, personal reluctance, unnecessary fear of legal
implication and so forth.
1.8 SIGNIFICANCE OF THE STUDY
This research study will help to maximize the beneficial impact of accounting
information on the decision making process of an organization. This boosts the
profitability of the organization as well as ensuring its continuity as a business
entity. It will help in the efficient allocation of scare resources that have
alternative use as well as increase productivity thereby uplifting the standard of
living. It will review the improvement in the organization or company handling the
accounting information and show equally the ways through which improvement
could be accomplished. In fact, all interested groups like shareholders, employers,
investors, creditors, stakeholders, suppliers, government etc, will benefit
immensely. This project will equally serve as a reference to student who may be
interested to embark on a research of this nature.
1.9 DEFINITION OF TERMS
INTEREST: The total or actual interest paid or earned in a year, expressed as a

percentage of the principal amount at the beginning of the period.
EFFICIENCY: A measurement of the ability of an organization to produce and

distribute its product. In accounting terms it is qualified by a combination of the
standard hours allowed for a given level of production and actual hour taken.
ACCOUNTING INFORMATION: This is a system designed to obtain the financial

position of an organization as at the end of the period.
INFORMATION: Is a processed data used in obtaining detailed information about
a particular person, thing or place.
LEVERAGES: They are used by companies on its limited assets to guarantee

substantial loans to finance its business. FINANCIAL INFORMATION: This is
information summarized bya company’s activities over the last year. They consist
of the profit and loss account, the cash flow statement etc.
ANALYSIS: In standard costing and budgetary control, analysis of variance in order

to seek their causes. The total profit of variance is analyzed into sub – variance
indicating the major reasons for budged figures.
DEBT: A sum owed by one person or organization to a person showing that such
debt are required to be settled within one accounting period.
RATIO: To put company’s performance in percentage. The use of accounting ratio

to evaluate a company’s operating performance and financial stability.
DECISION MAKING: This involves deciding betweenalternative courses of action.

In running a business, accounting information and techniques are used to
facilitate decision models such as discounted cash flow.
IMPACT: This means the duties, responsibilities and functions. As it has to do with
this work, it is that fundamental obligation incumbent on the public relations for
the attainment of democratic order in the organization policy.
ACCOUNTING: Is the process of producing needed information regarding
primarily the financial activities of economic entities. The wide scope of
accounting can be recognized when one considers the diversity of economic
entity which cut across sizes and borders. Accounting is the language used to
convey the result of the entity’s endeavors to the interested parties. An example
of financial statement has been identified as follows:
1. Statement of accounting policy
2. The balancesheet (Statement of financial position)
3. Profit and loss account (income statements).
4. Notes on the accounts.
5. Statements of source and application of funds.
6. Value added statement.
7. Five years historical summary10
INFORMATION ON DECISION MAKING PROCESS:

Information consists of data that have been retrieved, processed or used for
information purposes and as a basic for forecasting and decision making process.

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CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

During independence(1st October 1960), Nigeria joined the committee of nation,

In modern times, management requires a wide variety of information to

Subsequently accounting information is based on laws and regulations governing

Fundamentally, the nature of manufacturing business compels or drive it to carry

Furthermore, the major challenge facing every financial institution\ business

Imagine a good and effective accounting system is applied or implemented

1. The inability or capacity of accounting information to perform the required

2. To sense and understand the difficulty in extracting, gathering and utilizing of

4. Poor organisation and control of business activities and

5. Unsatisfactory service to its customers.

1.3 OBJECTIVES OF THE STUDY

The objectives of the study are as follows;

1. To confirm, if there has been a problem in generating and utilizing of

2. To determine the level in which the accounting information has effectively

3. To ascertain the degree or rate, to which accounting information gotten or

5. Assess the factors that mediate or moderate the relationship between

1.4 RESEARCH QUESTION

1. To what extent does the accounting information generated by the account

3. To what extent, does accounting information been improved effectively

1.5 RESEARCH HYPOTHESES

Ho: There are problem in generating and utilizing accounting information

Ho: Accounting information generated by account departments has not

H1: Accounting information generated by accounts department has

Ho: Accounting information has not improved effectively performed or fulfil

H1: Accounting information has improved effectively performed or fulfil the

1.6 SCOPE OF THE STUDY

This research focuses on exploring the influence of accounting information on

1.7 LIMITATIONS OF THE STUDY

Financial and time constraints were seriously encountered by the researcher.

1.9 DEFINITION OF TERMS

INTEREST: The total or actual interest paid or earned in a year, expressed as a

EFFICIENCY: A measurement of the ability of an organization to produce and

ACCOUNTING INFORMATION: This is a system designed to obtain the financial

LEVERAGES: They are used by companies on its limited assets to guarantee

ANALYSIS: In standard costing and budgetary control, analysis of variance in order

RATIO: To put company’s performance in percentage. The use of accounting ratio

DECISION MAKING: This involves deciding betweenalternative courses of action.

1. Statement of accounting policy

2. The balancesheet (Statement of financial position)

3. Profit and loss account (income statements).

4. Notes on the accounts.

5. Statements of source and application of funds.

6. Value added statement.

7. Five years historical summary10

INFORMATION ON DECISION MAKING PROCESS:

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