CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Financial
reports provides an overview of a business profitability
and
financial condition in both short and long term. They are necessary sources of
accounting information about companies for wide variety of users. In. every
business, there, needs information. This information needs ranges from
financial, production, marketing etc. Generally, the larger the organization
the greater the management need for information. Financial report plays a vital
role in decision making process of business organizations. The main purpose of
financial repots is the provision of financial information as a record making.
It has been said that accounting is the language of business. It might also be
said that the ability to apply accounting knowledge is critical to success in
business: A business prepares various report at the end of each fiscal period.
This report summarizes the changes that have taken place during the period. For
this financial report to be useful, the data be presented in such a way that
the user will recognize, Similarities, differences and trends form one period
to another to enable them make decisions. The accounting information contained
in the financial reports enables management to make more inform decisions.
Financial report
should
provide adequate information in all areas of organization and economic
activities; it should be able to disclose clearly the nature and accurate
accounts of the transactions fun which the true and fair view financial
position of the organization can be ascertained. Financial reports serve a lot
of useful purpose to different users namely, shareholders, Creditors, Banks,
government agents, employees, potential investors and the management of the
entity it self. The above identified groups of persons rely on the information
supplied by the given firm through financial reporting in which they have
interest to ascertain the organization‟s state of affairs which serves as an
important guide in deciding the extent to which they commit their fund. It is
the
“communication
of financial information useful for decision making such as investment, credit
and other business decisions” such communication include, general. Purpose
financial statement, balance sheet, equity report, cash flow reports and notes
to these statements.
1.2 STATEMENT OF THE PROBLEM
The
problem of this research is that, the management does not know the various ways
of presenting financial accounting reporting, which often affects managerial
decision making. There are no proper allocation of resources of the
organization which leads to non-achievement of the
profit maximization objective. Also the
inability of the management to recruit trained and professional personnel, as a
result, the quality of the decision made by this organization are very poor.
1.3
OBJECTIVE OF THE STUDY
The research
work covers the
effect of financial
accounting
reporting on
managerial decision making.
The studies have the following objectives:
To
know whether the various ways of presenting financial accounting reporting have
any effect on managerial decision making in the company.
To examine the attitude of management in the
allocation of resources which often leads to achievement of profit maximization
objective.
To determine the level of which management
recruit trained and professional personnel which leads to quality decision
making.
1.4 RESEARCH QUESTIONS
Based
on the objectives, the following research questions were developed:
Does
the various ways of presenting financial accounting reporting have any effect
on managerial decision making of the company?
What are the attitude of management in the allocation of
resources which often leads to profit maximization objective?
To what extent does management recruit trained and
professional personnel which leads to quality decision making?
1.5 STATEMENT OF HYPOTHESIS
Because of the above research questions, the following hypotheses
were formulated.
HYPOTHESES 1
HO: The various ways of
presenting financial accounting reporting does not have effect on
managerial decision making of the company.
HI: The various ways of
presenting financial accounting reporting have effect on managerial
making of the company.
HYPOTHESIS 2
HO:
There
are no proper allocation of management resources which often leads to
profit maximization objective.
HI:
There
are proper allocation of management resources which often leads to
profit to profit maximization objective.
HYPOTHESIS 3
HO:
Management
does not recruit trained and professional personnel which leads to
quality decision making.
HI:
Management
recruit trained and professional personnel which leads to quality decision
making.
1.6 SIGNIFICANCE OF THE STUDY
The
significance of this study is that, it shows the effect of financial reports in
the operation of the organization. This research is beneficial to internal and
external users of financial report. The financial of this research will help
managers determine the method of financial needs that will help in realization
of their corporate objectives. The study will help the management to know the
experts (accountants) that will be able to prepare an annual report that will
enable the management to make well-informed decision that will enhance profit
maximization. It will enable the external users to know whether the
organization is making profit in coder to invest more. Thi0s study will also
serve us resource material for other researchers for further research in
related areas.
1.7 SCOPE AND LIMITATION OF THE STUDY
The
research work covered the whole of Enugu State manufacturing companies, but due
to certain constraints the research is restricted to Nigeria Bottling Company
PLC. Thus, the research investigate the effect of using financial reports in
making management decisions.
The limitation of this study is the time factor. Since
the researcher carried out the research of the same time with her studies,
there was limited time for to cover all the necessary areas of the research
study. And also lack of audience from the despondence.
1.8 DEFINITION OF TERMS
ANNUAL
REPORT: this is a comprehensive report on a company‟s activities
throughout the preceding year. Annual reports are intended to give shareholders
and interested people information about the company‟s activities and financial
performance.
MANAGERIAL
DECISION: This is the decision concerning the operating of
the firm, such as the choice of the firm size, firm growth rate, and
employment.
INFORMATION:
This
can be seen as data which have been processed into a form meaningful to
the recipient (receiver)
ORGANIZATION: Is an organized body
of people working together for
the pursuit of a
particular purpose (s) called organization goals.
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