The Relevance of Accounting Information in Decision Making Process
Objectives of the Study
The objective of the study is concerned with establish the relevance of the role of accounting information on investment decision-making in champion breweries’ concerns. It is to further review and analyze accounting information in line with new techniques of presenting accounting information and its unique role as an aid in investment decision-making by the management. To answer the research questions, the following research objectives are placed down.
The Main Objective
The main objective of the study is to evaluate the role of accounting information on investment decisions.
1. To identify the relationship between accounting information and Investment decision-making in the Public sector.
2. To identify the frequency of using Accounting information on investment decisions in the Public sector.
This chapter is about concepts and theories from other researchers and authors on the title of the “role of accounting information on investment decisions”, observe from the role of accounting information on investment decision making process and the relationship between the two. In this study, the researcher provided an example details on how various studies explain on the role of accounting information in investment decision making in Public sectors. Furthermore, in this study, the researcher was provided details on how other defines accounting information and public sector, an overview of accounting information, how others reported on the role of accounting information in investment decision making in public sector.
Definitions and Concepts
An accounting Information
Refers to a financial data about business transactions expressed in terms of money. There are many definitions about accounting information. According to Moore (1984).Accounting is defined as an act of recording classifying, and summarizing in a significant manner and item of money transaction and events which are in part or least of financial character and interpret the result thereafter. It is a language of economic activities.
According to Belverdet al. (2011, p.8) financial statements are primary means of communicating accounting information about a business to those who have an interest in the business. These statements model the business enterprises in financial term.
The Balance Sheet
This shows the financial position of an entity as at a certain point in time. It discloses the prevailing values of assets held by the entity at the given date and the liabilities and equity of the entity entrusted.
The Income Statement
The statement which shows the results of operation on an entity during a particular period of time, usually a financial year of the organization. It shows how much profit has been generated by the entity or loss. This account or statement matches revenue earned with the expenditures incurred during that given period.
Cash Flow Statement
This shows the changes in cash position of an entity during a specified period. It identifies the element of cash flows from operating, investing and financing activities of the entity.
According to Pacioli, (2012), define an accounting as a process of measuring and recording the financial value of the assets and liabilities of a business and monitoring these values as they change with the passage of time. When we refer to a business we could be referring to an individual, a company or any other entity for which accounting records are to be kept i.e. a church, club or other non-profit organization.
According to Belverd e t al. (2011, P.8) explain as an information system that measure process, and communicates financial information about the business. Accounting is a link between business activities and decision making.
A decision is a choice made at a time, in a given context, from more alternatives, to stimulate actions of variable size and du survival and development, since it is prior to any action. According to Sherlekar (1997),decision means to decide, to come to conclusion or resolution. It represents a course of behavior or action about what must be or not done, decision is a choice whereby a person concludes about a situation.
This chapter discusses the overall study design and the study’s data collection and data analysis activities to be applied to collect sufficient data to test the study’s research hypothesis. This chapter explores the methodological approach for the study and it covers the research strategies, survey population, area of the research, sampling design and procedures and data processing and analysis. Research methodology defined as the procedural plan which can be used by the researcher to validity, objectively, and accuracy answers on the research questions.
Both qualitative and quantitative approaches was used by researcher to add value of the research study and confirm on the research analyses as it exists at present. Questionnaires were used as the main data collection instrument. Research design is the structure of the research. It is the glue that holds all of the elements in a research project together (Tromp, 2006). Furthermore, a research design will enable the researcher to complete the study within a short framework of time.
Area of the Research
The study was conducted at Champion breweries and the research shall focus on the “Role of accounting information on investment decision making”. The target populations of the researcher were 500 employees which include a department of Accounting and Finance, Management, Human resources. However, the key area in that organization was the department of Accounting & Finance and the senior organization decision makers.
Population of the Study
Population of the study was originated from employees of the organization. This is the population about which information is desired. The target population was comprised of all staff. Random sampling was applied to choose 50 staffs working at Champion breweries. The target of the population for the study was obtained from the administration and personnel department, accounting and finance department of the organization. The researcher focused on Champion breweries main office in Uyo, covering 50 respondents’. Population is refers to a total of items about which information is desired. It can be finite or infinite. So, population is said to be finite if its consist of a fixed number of elements, so that it is possible to count it in its totality. (Kothari, 2009, p.153).
INTERPRETATION, ANALYSIS AND DISCUSSION OF THE FINDINGS
This chapter represents the answers to the research questions as actually observed at champion breweries a case study.Also the chapter constitutes the discussion of the findings basing on the objectives of the research. It Lastly presents the summary of findings which test the hypothesis of the data as well as making comparison with what other reserachers have found in their studies.
CONCLUSION AND RECOMMENDATIONS
This chapter presents the summary, conclusion and recommendations of the study findings based on the analysis made in chapter four respects to specific objectives and thereafter general conclusions and recommendations for the course of action in respect to the objectives of the research have also been given
Summary of Findings of the Study
This chapter presented data presentation and discussion on findings obtained from chapter four; it further gives an interpretation of the study findings. The study had the total number 50 respondents who were investigated through the questionnaires. They explain the role of accounting information on investment decision making in Champion breweries branch. The primary purpose of the study was to evaluate the relationship between accounting information and investment decision. Various statistical techniques were used to analyze data derived from objectives of the study. Research questions were answered only by 36 respondents while 14 respondents were not answered the questions. The study findings show that majority of the respondents 30.5% were aged between 30-35 years.
Since the basic aim of this study is to evaluate the role of accounting information on investment decision making of Champion breweries. This is because prospective investor’s uses accounting information of any public or private sector and also financial institutions as a major parameter for assessing the profitability and the risk of investing in such organization, CHAMPION BREWERIES as a case study and the aim of accounting information is to provide financial information about an entity to interested parties or investors. The accounting information can become meaningful through financial interpretations and become necessary for any investment decision.
This research shows that the accounting information are mostly used for control, then for the purpose of analysis, operations reports, decision making, and are least used for the purpose of planning. Planning and decision making are the last from the aspect of intensity of using accounting information. The analysis of this study proves that there is significant relationship between accounting information and investment decisions.
It is observed from the analysis of the opinion of the respondents that 83.3% of the respondents say always they use accounting information in making investment decision in Champion breweries as a case study and 1.6% they don’t agree (they say No).
After analyzing the use of accounting information on investment decision, it is 58.3%respondents strongly agreed that they use accounting information for setting the organizational objective and 55.5% respondents agreed that they use accounting information in Core competitive advantage related investment decisions and 1.9% they don’t agree.
After analyzing the use of accounting information in Human resource investment decision, it is found that 50% respondents strongly agreed that they use accounting information in Human resources policies related investment decisions and 13.8% they don’t agree.
The analysis of the use of accounting information on investment decisions shows that 66.6% agreed that they use accounting information on investment decision in fixed assets related investment decisions and 19.4% disagree.
The analysis of the use of accounting information on investment decisions shows that 61.1% agreed that they use accounting information on investment decision in raising capital and 22.2% strong disagree.
The analysis of the use of accounting information on investment decisions show that 52.7% respondents agreed that they use accounting information in Organization culture related investment decision and 16.6% disagreed.
The analysis of the use of accounting information on investment decisions shows that 0% respondents agreed and 72.2% disagreed that they do not use new techniques of accounting.
The analysis of the use of accounting information on investment decisions shows The data shows that 41.6% of the respondent agreed that Top Management of CHAMPION BREWERIES they use accounting information on investment decision where as 16.6% of them disagreed strongly.
There is no major problem faced by management of CHAMPION BREWERIES as a case study in using the accounting system. They all using the updated accounting system and maintaining the standard of accounting system.
At the every initial stage of the study, the researcher had set forth the value of 55% as the minimum value of decision criteria to be based upon during the study and when drawing conclusion. Therefore all results of the key question or hypothesis which ranged from 55% or above were considered to meet the decision criteria.
Two hypotheses were accessible seeking to establish relationships between the role of accounting information and investment decisions. The study revealed that accounting information performs a crucial role on investment decisions which has been shown to be major force in investment decision making. This is achieved by implementing the best fundamental concept of accounting suitable for each public organization. The study also showed that accounting information plays a vital role in taking the effective, accurate and significant investment decision in human resource, long term investment. The study also tried to find out the problems of the accounting system faced by CHAMPION BREWERIES organization in Uyo branch.
The study proves that the accounting information was used by Champion breweries significantly. And the problem of using accounting system is poor. It is really a satisfactory result for an organization in CHAMPION BREWERIES. Since all public sectors still face technological changes from within the organization and outside the organization which ultimately results in increasing uncertainty. The issue is concerning with the accounting information and other publicly disclosed document that have been created important policy issues. In particularly, incorrect information could affect the decision making on investment.
Recommendations of the Study
Based on the findings of the research work, I therefore make the following recommendations of the study. There is an opportunity to increase the percentage of using accounting information on investment decision making in Champion breweries. Thus, the public organization should use accounting information always to increase the accuracy of their investment decision making. CHAMPION BREWERIES should increase the percentage of using accounting information for setting the accurate the objective.
The study also recommends that Champion breweries should increase the uses of accounting information on investment decision based on Human resource to increase the accuracy and effectiveness of the investment decision making. The researcher recommends that CHAMPION BREWERIES at Uyo should consult the accounting information before making investment decisions, and also it is recommending that all interested parties to accounting information should use required financial ratios analysis for investment decision making.
Finally, success or failure of any investment decision depends on accounting information.
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