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ACCOUNTING INFORMATION SYSTEMS AS DECISION MAKING TOOL IN SMALL-SCALE BUSINESSES IN NIGERIA

Project Topic: Accounting Information System as Decision Making Tool in Small-Scale Businesses in Nigeria 


CHAPTER ONE

GENERAL INTRODUCTION

BACKGROUND OF THE STUDY

The accounting profession has emerged as one of the pillars holding all sphere of the Nigerian Economy which involves the individuals, organizations, co-operate bodies and the government. In our daily living, we are faced and challenged with the problems of Accountability, transparency and otherwise which necessitates the need for accurate and timely decision making as managers of ourselves, co-operate bodies and of firms.

The nature of accounting varies according to the perspective from which it is viewed, and the purpose that it is expected to serve. It generally concerns itself with the development and communication of quantitative information which is essentially of a financial nature. Kodjo (2009: 3). It is a discipline that is very jealously respected. Truly, a proper accounting system is the bedrock of a successful business, whether big or small, public or private.  

Also, according to Okafor (2010), the accounting function is responsible for extracting, processing, summarizing, reporting and otherwise, managing all forms of financial information about the organization.

The accounting information system for the purpose of this study are grouped into three complementary components which includes the financial accounting system, the management accounting system and the cost accounting system. The financial accounting system is concerned with financial record keeping, providing information regarding profit or loss associated with an organizations economic activities during a given period and the financial position attained at the end of each period.

Management accounting system is used to allow organizational planning, monitoring and control for a variety of activities. This allows managerial level employees to have access to advanced reporting and statistical analysis. The system can help management to choose an optimal answer among alternatives. The cost accounting systems are used in manufacturing and service environment. It allows organizations to track the costs associated with the production of goods and/or performance of services.

In addition, the accounting information system can provide advanced analysis for improved resource allocation and performance tracking. It is also responsible for providing timely and accurate financial and statistical reports for internal management decision making and for external parties such as creditors, investors and regulatory and taxation authorities. Today, the systems uses modern information technology resources together with traditional accounting controls and methods to provide users such as shareholders, investors, employees, creditors and debtors with the financial information necessary to manage their organizations. Furthermore, the system provides the yardstick for measuring  the performance of a business organization and also serves as an instrument through which the management make decisions, formulate policies, strategies and its implementation and control. It is against this background that the researcher wishes to delve in to see the extent to which decisions are fully made in order to formulate policies, implement and control them using the accounting information systems.

STATEMENT OF THE PROBLEMS

Today’s organizations level playing managers have the duty of planning, organizing, directing and control which aids them in quick decision making. Quick decision making is one of the problems facing the management of every company, big or small which enables it  to formulate policies, implement and control results. In the past, researchers have tried to find out how these managerial decision making has been influenced using traditional accounting information systems, with regards that, firstly, many business failures even in the developed world continue to occur inspite of engaging top flight accounting firms. Secondly, lack of skilled professionals for the preparation of and presentation of accounting reports to management through a proper system of technology. Thirdly, published financial statements do not reflect a true and fair view of the company assets and liabilities owing to lack of efficiency.

The study will also examine the system used by management in collecting information, keeping and safeguarding important accounting records which to majority of companies is a problem.

OBJECTIVES OF THE STUDY

The overall objectives of the study is to evaluate how accounting information system is used in management decision making, that s, to determine whether management relies on the information on the records kept in the system in the course of making decision some other objectives include:

  1. The extent to which management decision is influenced by accounting information system
  2. Whether management relies on the accounting information system in making decision
  3. The systems used by the firms/businesses to safeguard important accounting records
  4. The types of records kept for generating information which may be the ledgers, the day books and soon. This study will investigate to find out whether the statements of these records represents a true and fair view of the transactions reported on it.
  5. The level of efficiency derived using accounting information system.

SIGNIFICANCE OF THE STUDY

A good accounting information system operated in a company is an indispensable aid to effective management. It assures management of the reliability of decisions taken by them and that these decisions are in accordance with goals to be attained. But no accounting information in an internal or external environment however elaborate could be completely watertight. This research study significance will; to the potential resources providers and investors serve as a useful guide to persons or group investing in business to determine at any point in time, the profitability of their investment. The report will without doubt, create great awareness to the management of the firms or various businesses or other managers, the importance of maintaining appropriate, complete and reliable set of records using accounting information system for such purpose as quick, corrective decision making and effective planning and control of the activities of their business.

For the employees and consumers, it will help them assess the ability of the business to produce goods and render services on a continuous basis and pay salaries. The research will be of benefit to the government in the case of tax collection and the regulation of business activities. Moreover, the study will utilize accounting information system to effect co-ordination, implementation and control to achieve maximum efficiency. It will also contribute to the existing literature on the topic, hence, it will be of use of prospective researchers who might want to use it as a guide to similar studies, to this group, it will readily serve as a useful guide

RESEARCH HYPOTHESIS

A hypothesis is the tentative answer to research problems. In order to achieve the above purpose, the researcher makes the following hypothesis;

Ho:   There is no positive and important relationship between accounting information system and decision making

Hi:    There is positive and important relationship between accounting information system and decision making

Ho:   There is no positive relationship between accounting information system and efficiency

Hi:    There is positive relationship between accounting information system and efficiency

Ho:   Accounting information system cannot serve as a decision-making tool is small businesses

Hi:    Accounting information system can serve as a decision-making tool is small businesses

RESEARCH QUESTIONS

The following questions has been mapped out to be answered in the course of this work

  1. What is accounting?
  2. What is traditional accounting information system?
  3. What is accounting information system technology
  4. Who are the users of accounting information?
  5. What role/benefit do accounting information play to these users?
  6. What bodies are responsible for the monitoring and accurate presentation of accounting information?
  7. What is decision making?
  8. Who are those that make decision in an organization?
  9. What is management information system?
  10. What are the functions of management information system
  11. Is the quality of reports affected by the qualification of the accountant? and accurate presentation of accounting information?
  12. What factors militates against the implementation of policies by management in using accounting information?
  13. What are the role of management in a good accounting information system?
  14. What is small business?
  15. What tool do management use in its decision making?
  16. To be more precise, the questions can be summed up in the statement. How can accounting information system be used as a decision making tool in small businesses?

SCOPE AND LIMITATIONS OF THE STUDY

Delimitations

This research study is only on the study of how accounting information system serve as a decision making tool to small-scale businesses in Enugu Metropolis.

Limitations of the Study

It is important to note that this work is not exhaustive but will undergo some limitations such as:

  1. The relunctancy of some staff to grant audience to the researcher is expected to occur. Despite this, will not constitute an uphill task that cannot be overcomed
  2. Secrecy involved in handling some of the firm’s data which are regarded as confidential and very hard to obtain
  3. In addition to this is the time factor, since the researcher has a lot of things competing for his scarce time, he may have some problems writing this work
  4. Problem of finance; the researcher being a student may find it very hard to source for this research work and may not be able to afford the necessary requirements and logistics it takes to develop more on the work.

Since we are not God, it is possible that the successful completion of this work may be hindered by either sickness, accidents or other peril.

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Project Topic: Accounting Information System as Decision Making Tool in Small-Scale Businesses in Nigeria 

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