The Use of Accounting Information as a Management Tool for Decision Making (Case Study of Dangote Nigeria Plc.)
Objective of the studies
The main objective of this research study is to examine the Use of Accounting Information as a management tool for decision making in the context of Dangote Group Plc. However, the specific objectives of the study are to:
- Assess if accounting information have any effect on management decision.
- Examine if there is any relationship between the perception of the employees and accounting information of the firm.
- Evaluate whether accounting information affect the company performance positively or negatively.
REVIEW OF LITERATURE AND THEORETICAL FRAMEWORK
This chapter review relevant literature on the same thematic areas in order to identify areas of convergence and divergence views of renowned authors, researchers and writers. This chapter also covers conceptual review, empirical studies and theoretical framework of the topic under study.
Conceptual Clarifications on Accounting & Accounting Information System
Management is constantly confronted with the problem of alternative decision making especially knowing that resources are relatively scarce and limited. It is therefore pertinent that good accounting information be made available for proper and accurate decision making, maximization of profitability and optimal utilization of scarce resource. Accounting is defined by Webster’s ninth new collegiate dictionary, as “the system of recording and summarizing business and financial transactions and analyzing, verifying and reporting the results. Accounting in view of this study can be defined ordinarily as the means by which managers are informed of both the process and financial status of a business concern.
Warren, Reeve, and Fess (2005) defined accounting as information system that produces reports to the interesting parties about economic activities and company’s condition. The primary objective of accounting is to provide information that is useful for decision making purposes. It means that accounting is an information providing activity.
Hodggett (2012), conceptualize accounting information as the financial information about economic activities. All economic entities (e.g. businesses, government agencies, families, charitable entities) need such information because it is used for making economic decisions about those entities. An economic event of an entity is referred to as a transaction. Transactions are of two types: external and internal.
Mbanefo, (2007) conceptualize accounting as a measurement and communication system to provide economic and social information about an identifiable entity to permit users to make informed judgments and decisions leading to an optimum allocation of resources and the accomplishment of the organizations objectives.
Edwards (2012), defines Accounting has been defined as the process of identifying, measuring, recording and communicating economic information to permit informed judgments and economic decisions. The primary purpose of accounting is to help persons make economic decisions. In our society resources must be allocated among and within all kinds of entities. Accounting information provides the basis for making decisions about resource allocation. To be useful, data must be identified, measured, recorded, classified, summarized and communicated to potential users. These are the critical elements of accounting.
According to Fess and Niswonger (2008), accounting is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information. Accounting information is a food for management planning and decision making. It refers to report of relevant financial information regarding the economic activities of an organization or business venture.
The research methodology, which present the techniques and procedures used for this study sets out by considering the design, population, sample size and sampling methods, research questions as well as the analytical tools employed in the analysis and interpretation of data obtained from this study.
Data Presentation, Analysis and Interpretation
This chapter focused on data presentation, analysis and interpretation of the findings relating to this research topic, based on the data generated from the field survey. Out of the 110 questionnaires distributed to respondents, 101 were returned and found useful for this analysis, as such, analysis was based on this 101 responses. The data from the questionnaire were coded and presented on excel spread sheet for further analysis. The data were then exported into a Statistical Package for Social Scientists (SPSS) software version 17.0.
Furthermore, the formulated hypotheses are subjected to inferential test using one –way analysis of variance (ANOVA). The chapter also discusses the findings of the analysis.
Summary, Conclusion and Recommendation
This chapter covers the summary of the research topic, conclusion based on the findings of the research and recommendations for further research.
Accounting information is aimed at information system that produces reports to the interesting parties about economic activities and company’s condition. The primary objective of accounting is to provide information that is useful for decision making purposes. It means that accounting is an information providing activity. The objective of accounting is simply to produce information used by managers to run company’s operation. Accounting also gives information to the interesting parties about economic performance and company’s condition. Accountings role is to gather data about a business’s activities, provide a means for the data’s storage and processing, and then convert those data into useful information. An accounting system consists of the personnel, procedures, technology, and records used by an organization (1) to develop accounting information and (2) to communicate this information to decision makers. Accounting information is raw data concerning transactions that have been transformed into financial numbers that can be used by economic decision makers. However, accounting information is knowledge or news about a reckoning of financial matters. Accounting information is central to many different activities within and beyond an organization. Accounting information is essential to business operations. The types of accounting information that a company develops vary with such factors as the size of the organization, whether it is publicly owned, and the information needs of management. The types of accounting information required depend on the types of business decision made by management. It means that the role of accounting information is assist manager in making business decisions. Accounting information is classified in to three different types according to the benefits for the users: 1. Statutory Accounting Information is the information shall be prepared in accordance with existing regulations. 2. Budgetary Information is the accounting information presented in the form of budget that is useful for internal planning, assessment, and decision making. 3. Additional Accounting Information is other accounting information prepared by the company in order to increase the effectiveness of decision making. The study tried to address the problem with the improper use of accounting information by managers and employees which serves as a major shackles hindering the effectiveness of management decision making.
- The study revealed that accounting information has significant effect on management decision making at a statistical significant level.
- The study also revealed that the manufacturing industry needs informed financial decisions that would enhance overall performance.
- The study revealed further that most workers in Dangote Nigeria are single within the age bracket of 21-30. This shows that the industry is highly populated with young brains with vibrant skills.
- The study revealed that accounting information obviate the necessity of remembering various transactions in Dangote Nigeria Plc.
- Furthermore, it was also revealed that there is a relationship between the perception of employees and accounting information as a result of the fact that employees and their representative are interested in the information which enables them to assess the ability of the enterprise to provide remuneration, retirement benefits etc.
Based on the statement of problem, the objective of the study and the result of the findings, the following recommendations are made.
- Companies should consult professional accountants when starting a business to learn about the various laws that affect them also to familiarize themselves with the variety of financial records that they will need to maintain.
- Clear-cut definition of long term corporate objective, within which the accounting information system will operate should be provided.
- Decision making should be administered in flexible and variable rigid adherences to accounting information, which are clearly appropriated for current conditions. This will cause the whole accounting system to gain credibility and effectiveness.
- The company should always keep records of past events in case of future purpose, this can be possible with the use of computer or by fully automating the company’s operation.
- A professional accountant should be employed by the company in order to keep valuable information and keep accurate records of the company’s account.
Suggestions for Further Research
Further research on the study abounds in this study area like;
- Relationship between accounting information management and Organization Effectiveness.
- Accounting Information for Business Performance Assessment in Small and Medium Enterprises (SMEs).
- The study failed to critically examine the relationship between accounting information and employee’s commitment.
- The study was unable to look at the framework for analyzing accounting information in the manufacturing industry, so further study can embark on this.
- Further research can also involve a replication of the present study in other industry to know whether the findings of this study can pass the test of generalizability.
The research study revealed that accounting information performs a crucial role on management decisions and organization performances, which has been shown to be major force in decision making. This is achieved by implementing the best fundamental concepts of accounting suitable for each company. The company used as case study made the researcher to understand that, for any company to be successful, it should endeavor to make use of accounting information because accounting itself is a language of business, and before venturing into any business, one must know the right method to achieve the stated goals and objectives. Also, studies have shown that successful utilization of accounting information requires a fit between three factors. First, a fit must be achieved with dominant view in the organization or perception of the situation. Second, the accounting system must fit when problems are normally solved, i.e. the technology of the organization.
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