The Use of Accounting Information for Decision Making

The Use of Accounting Information for Decision Making

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Chapter one on The Use of Accounting Information for Decision Making

INTRODUCTION

BACKGROUND TO THE STUDY

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. 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.

 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.

 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

RESEARCH QUESTION

1  What is the nature of accounting information
2  What is the significance of accounting information in decision making in the organization.
3 What is the use and application of accounting information in decision making?

SIGNIFICANCE OF THE STUDY

The study shall proffer 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.  

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  

SCOPE OF THE STUDY

The study focuses on the appraisal of the use of accounting information in decision making.

 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.

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