The Use of Accounting Information as a Management Tool for Decision Making
ABSTRACT
The act of management has always had an essential role in human community activities. The efficiency of a company depends on the quality of the managerial process. This requires performance management, which means competence and rational decisions. Accountancy can support the decision-making process and management activity.
The objective of an accounting system is to provide financial information concerning the studied company. The information concerns the financial situation and the performance of a company and there is intended for the users to taking decisions.
For taking decisions by the management in order to achieve the objectives of the company it is necessary to know exactly the situation of the company, either compared to other companies that work in the same field or in relation to previous periods, this thing is possible through the accounting information.
TABLE OF CONTENTS
Title page……………………………………………. I
Certification………………………………………… ii
Dedication…………………………………………… iii
Acknowledgment………………………………… iv
Abstract……………………………………………….. V
Table of content……………………………………. Vi
CHAPTER ONE:
CHAPTER TWO:
2.0 Introduction
- Conceptual clarifications on accounting and accounting information systems.
- Concept of decision making.
- Decision-making tools.
- Empirical studies review.
- Performance effects of accounting information in management decision making.
CHAPTER THREE:
3.0 Research methodology
- Research design
- Re-statement of the research question.
- The population of the study.
- Sample and Sampling Techniques
- Method of Data Collection
- Reliability and Validity Tests
- Method of Data Analysis
- Limitations of the methodology.
CHAPTER FOUR:
- Data presentation, analysis, and interpretation
- Presentation of results.
- Summary of demographic characteristics
- Data presentation.
CHAPTER FIVE:
- Summary, conclusion, and Recommendation
- Summary
- Conclusion
- Recommendation
References
Questionnaire
INTRODUCTION
Accounting information is the language of business as it is the basic tool for recording, reporting, and evaluating economic events and transactions that affect business enterprises. It processes all documents of a business’s financial performance from payroll, cost, capital expenditure, and other obligations to sale revenue and owners’ equity.
It provides financial information about one’s business to internal and external users, such as managers, investors, and others. It is sometimes referred to as a means to an end, with the ending being the decision that is helped by the availability of accounting information (Arneld & Hope, 2009).
The making of decisions, as everyone knows from personal experience is a burdensome task (Wada, 2006). In most cases indecision is as disastrous as making a wrong one, therefore a plan of action is indispensable. Management is constantly confronted with the problem of alternative decision making especially knowing that resources are alternatively scarce and limited.
It is therefore pertinent that good accounting information is made available for proper and accurate decision making, maximization of profitability, and optimal utilization of scarce resources. Accounting information is not only necessary for evaluation of the past and keeping the present on course; it is useful in planning the future of the enterprise.
According to Mbanefo (1997), planning may conventionally be call budget/budgeting targets, which give meaning and direction to operations of the organization within a defined period. At the end of the budget period, the external results are compared with budgeted performance, and discrepancies (variance) are analyzed for purposes of exposing the causes so as to prevent re-occurrence.
Budgeting uncovers potential bottlenecks before they occur, coordinates the activities of the entire organization by integrating the plans and objectives of various parts. The budget ensures that the plans and objectives of the parts are inconsistent with the broad goals of the organization.
It compels managers to think ahead before formalizing their planning efforts and finally provides defined goals and objectives which serve as benchmarks for evaluation of subsequent performance. Management uses both financial and non-financial information to make effective decisions that would help achieve the goals and objectives of the organization (Melisssa Bushman, 2007).
Financial information used by management accountants includes sale growth, profits, return on capital employed and market shares, non-market shares, non-financial information includes customer satisfaction level, production quality, the performance of competing products, and customer loyalty. Decision-making is, however, the choice of alternative courses of action using cognitive processes.
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