THE
USE OF ACCOUNTING INFORMATION FOR DECISION MAKING
ABSTRACT
The
research profers an analysis of the use of accounting information in decision
making.It appraises the nature of accounting information and its various ways
of application in decision making concerning the management and operations of
the organization. The research elucidates critical decision making affecting
the organization and consequently necessitating the use of accounting
information.It portrays the grave consequences of the neglect and insufficiency
of the use of accounting information for decision making.The research therefore
depicts a significant dimension of providing an analytical framework of the
application of accounting information for decision making.
INTRODUCTION
The
imperative of planning with the help of accounting information before the
commencement of operations is essential for management to facilitate the
decision making process of fundamental issues affecting the survival, wellbeing
and growth of an organization.
Accounting
information is often regarded as a means to an end, with the ending being the
decision that is helped by the availability of accounting information as
described by Arneld and Hope(1990). Accounting information helps managers understand
their tasks more clearly and reduces uncertainty before making decisions.since
profitability have long term effect on the business, it is therefore important
to analyze accounting information before making profit decisions (Chong 1996).
Similarly,accounting information is recognized as a learning machine that can
help to evaluate how objectives might be
achieved by quantifying the financial impact of each alternative
available to the decision.(Budugan and Georscu 2009).
Accounting
information system is therefore imperative which is the efficient and effective
collection and storage of data concerning an organisations financial
activities, including getting the transaction data from source documents,
recording the transaction in journals and posting data from journals to
ledgers. It involve producing managerial reports and financial statements.
1.1 BACKGROUND OF THE STUDY
Decision
making process in the organization is effective with the availability of
sufficient accounting information. Accounting information for profit planning
usually covers three major elements such as cost information ,marketing and
sales information(Admareli, 1991).
According to
Norton (1997) costing contributes to an understanding of how profits and value
are created and how efficiently and effectively operational processes transform
input into output.It can be applied to resource, process, product/service,
customer, and channel related information covering the organization and its
value chain (Metcalfe,1998).Thus the decision making process lies at the heart
of accounting information
The research
intend to investigate the use of accounting information for decision making.
1.2 STATEMENT OF THE PROBLEM
The problem confronting
the research is to investigate the use of accounting information for decision
making.The efficiency of planning and decision making cannot be isolated from
the availability and sufficiency of accounting information if the organization
must survive, grow and operate maximally to make profit and attain its set
objectives.
1.3 RESEARCH QUESTION
1
What is the nature of accounting information
2
What is the significance of accounting information in
decision making in the organization
1.4 OBJECTIVE OF THE RESEARCH
1
To determine the nature of accounting information
2
To appraise the decision making process of the organisation
3
To determine the use and application of accounting
information in decision making
1.5 SIGNIFICANCE OF THE STUDY
The study
shall profer an analysis of the application of accounting information in the
decision making process of an organization
It shall be a valuable
source of information for managers, accountants etc.
1.6 STATEMENT OF HYPOTHESIS
1
Ho The quality of decision making in the organization is low
Hi The quality of
decision making in the organization is high
2
Ho The use of accounting
information is low
Hi The use of accounting information is high
3 Ho
The effect of accounting information in decision making is low
Hi The effect of accounting
information in decision making is high
1.7 SCOPE OF THE STUDY
The study
focuses on the appraisal of the use of accounting information in decision
making.
1.8 DEFINITION OF TERMS
ACCOUNTING
INFORMATION SYSTEM DEFINED
Accounting
information system is therefore imperative which is the efficient and effective
collection and storage of data concerning an organisations financial
activities, including getting the transaction data from source documents,
recording the transaction in journals and posting data from journals to
ledgers. It involve producing managerial reports and financial statements.
DECISION
MAKING DEFINED
Decision
making involve choosing from among a given alternative the best possible option
of a solution to a given problem confronting an organization at a given point
in time.