Impact Of Accountancy Information On Decision Making Process (Case Study Of Two Companies In Enugu)

  • Format: Microsoft Word
  • Pages: 87
  • Price: ₦3000
  • Chapters: 1-5
  •  
  • Click to DOWNLOAD Materials

THE IMPACT OF ACCOUNTING INFORMATION ON DECISION MAKING PROCESS. (A CASE STUDY OF ANAMMCO LTD)

ABSTRACT

Accounting generally involves the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions of users of the information.

In other words, accounting is concerned with providing information, which will help decision makers to make decisions. To enhance creditability and utility of the information, the decision making process, established concepts, principles, standard and legal requirements are strictly followed in order to translate physical facts into money values and ensures that all types of report are integrated and prepared on consistent basis.

The information provided by financial statement, cash flow, variance analysis, managerial costing in planning, organizing decision-making and control are invaluable to achieve objectives of the various interest groups. In spite of all the arrays of accounting tools at our disposal, organizations still wobble, trouble down the drain.

It is against the background that the researchers delved into the study of the impact of accounting information on decision taking process of organizations. To this end, the relevance, time liners, accuracy, conciseness, and clarity of the information and modes of presentations of the users were examined.

It is the objective of the researcher to highlight more vividly the invaluable importance of all these accounting tools and techniques in the decision-making process organization to better equip users of the job ahead. These researchers believe would help significantly in reviewing our economy.

However, during the course of the research, the researcher discovered that proper and enough accounting information were being generated and applied substantially in organization studied such as ANAMMCO, point industry etc. also apply accounting information in decision making.

Hence, it was concluded that the problems of the economy lies elsewhere other than insufficient generation and application of accounting information in decision making process in organizations.

Based on the findings and conclusions the researcher recommended for further research into the other variables that might be contributing to our economy disorder. Therefore, the project was broken down into first chapter as indicated  in the table of contents.

TABLE OF CONTENTS                                                                            PAGE
CHAPTER ONE
1.0        Introduction

1.1                Background  of  the  study

1.2                    Statement  of the  problem

1.3                    Purpose of the study

1.4                    Scope and delimitation of the study

1.5                    Research  questions

1.6                    Statement of hypothesis

1.7                    Significance of the study

1.8                    Historical Development of the company (ANAMMCO LTD.)

CHAPTER TWO

2.1                                             Review of related literature

2.2              Nature and objective of accounting

2.3               The value of information

2.4                 Characteristics of accounting information

2.5       Uses of accounting information

2.6       Kinds of accounting information and tools

for decision making.

2.7       Summary of the related literature review.

CHAPTER   THREE

METHODOLOGY                                      

3.1                            Research design

3.2                            Area of study

3.3                            Population of study

3.4                            Sample and sampling procedures

3.5                            Instrument for data collection

3.6                            Validation of the instrument

3.7                            Reliability of the instrument

3.8                            Method of data collection

3.9                            Method of data analysis

CHAPTER   FOUR

Data Presentation

4.1                            Presentation, analysis and interpretation of data.

4.2                            Hypothesis testing

CHAPTER   FIVE

Summary of Finding Conclusion and Recommendations

5.1                              Summary of findings

5.2                              Discussion of findings

5.3                              Recommendation

5.4                              Conclusion

5.5                              Implication of the study

5.6                              Suggestion for further study

5.7                              Limitation of the study

References / bibliography

Appendix

CHAPTER   ONE

1.0                              INTRODUCTION

1.1       BACKGROUND OF THE STUDY

At independence, Nigeria joined the committee of nations with the hope for a better tomorrow. We were able to feed ourselves and were of course almost self-sufficient. Subsequently, our hopes seems unattainable. We seem to be going deeper and deeper into the woods. The consensus is that it has been bad for Nigerian.

Due to the adverse economic conditions prevailing in the country, many businesses have chased shops and even financial institutions are being declared distressed at alarming rate. Business that are yet to be submerged or that want to stay afloat, employ all kinds of strategies. Some increase prices, adopt promotional tools, engage in aggressive marketing etc. whereas, others go for an odd combinations of activities and even subterranean one to survive.

Any business or individual that want to survive must make the right decisions. The era of mile of thumb is gone , employing it is a sure way to fail absurdly.

The price of any conceivable item from garri and bread to radio and book not to mention petrol has been soaring in geometric progression over  the years.  The economy is truly in dire straits. These compounds and complicates intricately, are the problems of organizations vis-a vis-effective  planning and decision making processes other factors such as stagflation, taxation, economic and political in research study. It is the intention of the researcher to concentrate more on financial accounting, cost accounting as well as management accounting. Nonetheless, recourse should be made to the other branches if accounting whenever there is need to do so. ‘Financial accounting is the part of accounting which covers the classification and recording of actual transactions of an entity in monetary terms in accordance with established concepts, principles, accounting standards and legal requirements. It presents as accurate view as possible of the effect of those transactions over a period of time and at the end of time.” Overtime, it evolved and metamorphosed into a very complex web of integrated financial information system which modern organizations cannot do without.

It presents a broader, more overall view of the organization with primary emphasis upon classification according to type of transactions rather than cost and management accounting emphasis on functions, activities, products and processes and internal planning and control.

Cost accounting and management accounting are very much infnsically interwoven that the difference between the two is superficial, as that definition of management accounting will substitute the other. Management Accounting is the provision of information required by management for such purposes as:

(a)         Formulation of policies

(b)         Planning and controlling the activities of the enterprise

(c)         Decision taking on alternative courses of action.

(d)        Disclosure to those external to the entity (shareholders and others.)

(e)         Disclosure to employees

(f)          Safe guarding assets.

The above involve participation in management to ensure that there is effective: –

(a)                Formation of plans to meet objectives (long term planning).

(b)               Formation of short term operational plans (budgeting profit planning).

(c)                Recording of actual transactions financial cost accounting).

(d)               Corrective actions to bring future actual transactions into line.                       (Financial control).

(e)                Obtaining and controlling (finance treasure ship)

(f)                 Reviewing and reporting on systems and operations internal audit           and management audit).

Cost accounting as a subset of management accounting is aptly buttressed by Lucey T. in his book “costing” where he defined cost accounting as that part of management accounting which establishes budget and standard cost and actual cost operations, processes, department or products and the analysis of variance, profitability or social use of fund.

1.2              STATEMENT OF THE PROBLEM    

Nigeria is in very distinct economic year. Some aspect of our economy are experiencing unprecedented hyper inflation where as other aspects are worst till by devastating depression, for years now, the emphasis is on the restructuring of our economy. The international monetary fund (IMF) prescribed some better-internal restructural measures (without regards to our socio economic (background) which were applied. The cream of our economists who can dictate economy is still running heedlessly into the words culminating in failure of business and pauperization of a great majority of Nigerians. Under the present economic dispensation very different to stop a float vis-à-vis those that are yet to be submerged.

In times like this, judicious use of relevant information and techniques in decision-making processes of organizations, individuals and corporate entities are without questions. Application of accounting information makes the difference between failed banks, enterprise, corporate bodies etc. and successful ones. In all cases, the accountants have collected, analyzed interpreted, presented and communicated the information for the use of interested parties. It remains the adoption, application and implementation of that information for the benefit of the organization. If these were being done as and when due, then the faultifarons failures in the business sector and domestic even government would not have been. So the problem is, are interested users actually aware of these various accounting in formations and they apply them in their production or investment decision making process; can decision based on accounting information actually raise efficiency level via cost minimization and wealth maximization?

In summary, the problems encountered in course of this research are:-

(1)               Material constraints occasioned by exorbitant and rising cost.

(2)               Financial constraints.

(3)               Inaccessibility to data due to unwillingness on the part of the company to give them out.

(4)               Transportation problem.

(5)               Time constraints.

1.3              PURPOSE OF THE STUDY 

Gross inefficiency and non-application of sound professional principles have been known to be a serious factor contributing to the failure of businesses.

Business and economic investors are no more Father Christmas. They will invest it and only if they are connected or convinced that their return on anticipated investment are high, guaranteed and out weight all risks including financial costs. The only way t o assure them of this is through efficient production via cost minimization by plugging leakages thereby maximizing the efficiency of operations.

Apart form technical know-how and capital, efficient management  of information is paramount if the organization is to achieve it’s objectives.

THE OBJECTIVES OF THE STUDY ARE THEREFORE:

(i)                 To determine whether information generated by the  account department are effectively applied in the production and decisions of the organization.

(ii)               To know the extent to which these information fulfill the basic roles of cost minimization, proper allocation of scarce resources and improvement in the period efficiency.

(iii)             To determine whether there are problems in   generating and utilizing other information necessary for production decision and to suggest possible solutions to the problems.

1.4              RESEARCH QUESTIONS:

They are as follows: –

(i)                 How did information generated by the accounts department effectively           applied in the production and decisions of the organization?

(ii)               Do these information fulfill the basic roles of cost minimization, proper           allocation of scares resources and improvement in the production           efficiency

(iii)             Is there any problem in generating and utilizing the information necessary for production decision and suggested solutions for the problems?

1.5              STATEMENT OF HYPOTHESIS

HO:     Null-Hypothesis

HI:       Alternative Hypothesis

Number One:

Ho: The accounting information generated in manufacturing firms is not utilized effectively in production decisions.

HI:    The accounting information in manufacturing firms fulfills the basic roles of proper resources allocation cost minimization and production efficiency in production decision making.

1.6              SIGNIFICANCE OF THE STUDY

High interest rates, massive depreciation of the local currency (Naira), non-utilization of installed capacity of manufacturing plants, of inevitable funds occasioned by low capital formation, political instability, stupendous-financial irresponsibility, devastating inflation, incredible deflation, high cost of living, high unemployment rate, and inappropriate taxation policy are factors that impinge adversely on the operations f manufacturing organization on the entire economy.

This research study will help to maximize the beneficial impact of accounting information in the decision-making processes of an organization. This boosts the profitability of the organization as well as ensuring it’s continuity as a business entity. It will help in the efficient allocation of scares resources that have alternative uses as well as increase productivity thereby up lifting the standard of living.

In fact all interested group like shareholders, employee, investors, creditors, government etc will benefit immensely.

1.7              HISTORICAL DEVELOPMENT OF THE COMPANY ANAMCO LIMITED.

The Anambra Motor Manufacturing Company was incorporated on the January 17, 1977. The foundation stone was laid on the 12th May 1978.  The official commissioning of plant was in July 8th 1988. Their production range include the following:

MB Truck of 5 38 pietrictons gross weight.

MB 0131 (42 seats city intercity /intercity buses)

MB 04000R (Intercity bus-49 seats)

Mb 0400S (Intercity bus- 53 seats)

MB 0400R (Intercity bus-56seats)

MB 0911 (56 seaters bus)

MB 01414 (61 seaters bus)

MB 01520 (52 seater bus)

MB 01/2/632 (52 seaters bus)

Also including in their production range are five-fighter bus or vehicle, Ambulances, mobile clinics, Refuse Disposal vehicles and vehicles refurbishment.

This company also has training facilities/ opportunities for their staff and distributors dealers and flat owners.

ANAMBRA MOTOR MANUFACTURING COMPANY  

(ANAMMCO) was established under the regime of the then military Head of state, General Olusegun Obsanjo.

It is a private limited company which is a partnership between the federal government of Nigeria and German Benz of Germany and German Benz of Germany with 40% shareholding by the foreign Mercedes Benz of Germany 35% share holding by the federal government of Nigeria and balancing 25% owned by the state government among which Enugu State is one another individual Nigerians.

 

In it’s first year the company produced above 4,352 units of various trucks model. The achievement was 50% of its installed annual capacity which was 7,500 vehicles within the first five years, the plant had produced what had put additional 14, 609 \Mercedes Benz vehicles into the Nigerian market.

They also manufacture heavy truck such as LS 1924, LS 3224 models and light duty buses such as 911, L1414, MBO 1414 of federal Mass Transit), MBO 809 formerly MBO 608 etc, which had greatly enhanced the Mass Transit policy of the federal, state and local government.

They have grown from manufacturing company to maintenance and repair (services) company.

The company operates line function with the Board of Directors assisted by the deputy management Director. The managing director report to the Board. There are four divisions of financial, personnel, Technical and marketing heads by a General manager who reports to the managing director.

The divisions are further divided into department headed by functional heads like Financial/Accounting manger. Departments are further broken down to groups, groups to sections and sectors to operatives.

 

Sharing is caring!

Leave a Reply