THE EFFECT OF FINANCIAL ACCOUNTING REPORTING ON THE MANAGEMENT OF A BUSINESS
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Effort is made to access the effect of formal accounting reporting on the management of a business financial accounting covers those activities related to the preparation of certain reports which are known as financial statements. These statement report the financial status of a firm at a particular time. The firms activities and resulting profit/losses during the most recent period and the flow of resources occurring within the firm during the same period.
I draw my research from the work of many authors. Such work done have included textbooks in all forms, magazine and Encyclopedias.
Apart from extensive use of literature, other method of research include (a) interview with businessmen. (b) Questionnaires have been designed and distributed to some businessmen (especially at trade fair). The questionnaires have been designed for officers in management cadre in public and private companies, shareholders, staff, partners and owners in sole proprietorship
TABLE OF CONTENT
1.0 Introduction 1
1.1 Statement of problem 3
1.2 Purpose of the study 3
1.3 Significant of the study 4
1.4 Statement of Hypothesis 5
1.5 Scope of the study 6
1.6 Limitation of the study 7
1.7 Definition of terms. 8
2.0 Review of Related Literature 11
2.1 Accounting as a language of business 11
2.2 Users of accounting information 13
2.3 Characteristics of good information 17
2.4 Management of information 19
2.5 Basic accounting concept 25
2.6 The financial accounting branch 25
2.7 Other accounting branches. 27
3.0 Research design and methodology 30
3.1 Sources of data 31
3.2 Sample Size 32
3.3 Method of investigation 32
4.0 Data presentation and analysis. 36
4.1 Data presentation and analysis. 36
4.2 Test of hypothesis. 43
5.0 Summary of findings, conclusion and recommendation. 50
5.1 Findings 50
5.2 Conclusion 51
5.3 Recommendation 53
Financial accounting covers those activities related to the preparation of certain reports which are known as financial statement. These statements reports the financial status of a firm at a particular time the firms activities and resulting profit or losses during the most recent period and the flow of resources occurring within the firm during the same period.
This statement made by A. THOPSON MONTAOMERY gives us an idea on the meaning of financial accounting. However the question arises what are the efforts of these financial account reports in the management of business? The answer poses a problem which the paper will seek to solve. Not all business persons understand the impact of financial accounting information on the management of their business, some manages business intuitively. Other, like traffic defaulters who disobey road signs, disobey the warning of communicated by financial accounting information and end up in a “Business Accident”
There are other sources of information which have impact on the management of Business and the combination of these sources give an information system in the complex nature. As FARM WOOD puts it, “it must not be thought that accounting of any form is the management control system. Instead it is part of it”. But accounting information is the only system through which both mangers and external users get a picture of the organization as a total entity.
Moreover, financial accounting information usually comes in the disguised form by “wearing” the cloak of technicalities. Such technicalities include calculation which need expert knowledge in its interpretation. But when some business because of low financial layout, cannot employ such experts hands, they tend to ignore financial accounting information system which has an effect on the management of any business concern. The problem is: Do all businessmen know this? This is the question that the researcher seeks to answer also.
1.1 STATEMENT OF THE PROBLEM.
Is very important for the functioning of any business. The finacial accounting system in most business organization do not potrary fully the principles of accounting systems. The flow of information, the cost of collecting any information and the internal control procedures have some loops holes.
In reality, it would be impossible for the researcher to study all the information system in all or even one of the organization. The study therefore involves a study of some typical financial accounting reporting on the management of a business. The researcher will carry out an empirical study and appraisal of a business financial accounting and see whether there is room for improvement to be made. It will therefore involve a review of the financial accounting and its related procedures.
1.2 PURPOSE OF STUDY
The goal of every business is profit optimization. The management of most business exist primarily for this purpose. Whether the business ownership is separated from the management, the rules for profit optimization (or maximization as some books may choose to call it) are still the same. Profit optimization is used rather than maximization. In this paper because optimization has a social effect.
The mangement is able to do this as long as they are able to use their financial resources profitably they must know the effect which financial accounting information has on the management of the business. Financial accounting measures, by means of the reports they prepare the extent to which management has succeeded in their goals of profit optimization.
The report which serves as financial information of the accounting period has an impact on the future achievement of the business. This effect now becomes the goal of this research. The researcher seeks to know more about this effect (ie the financial accounting effect on the management of business) and also advices all business persons on the effect.
1.3 SIGNIFICANCE OF THE STUDY
The research will be significant or useful in
- Examining the effect of financial accounting as information system.
- Directing the business person to such effect
- Warning, not only business persons but all person’s from neglect of financial accounting
- Encouraging all to obey head the warning of financial accounting information.
The following classes of people will find the work as useful references.
- Managers of companies, corporations and any other firm business whether such business are owned by management or not.
- Actual and potential leaders of money to business.
- Owners and shareholders
- Other researchers.