BACKGROUND OF THE STUDYEvery business organization whether in the public or private sector is established to achieve certain objectives. This could be profit maximization as in the case of the private sector or efficient and timely provision of essential services at a reduced price, as in the case of the public sector.
The performance of such business organization has to be reported in monetary terms to the owners of the business. (For example, shareholders in the case of private organization or the government as in the case of public)
Accountancy plays a vital role in the stewardship of an organization. Accounting has been defined as the process of recording, classifying, reporting and interpreting the financial data of an organization. While it is important for the accountant to have a sound knowledge of this phase of accounting process, it is often a relatively minor part of his total attention to the management reporting and interpretation of the meaningful implication of the data. (Welgenbad and Dittrich 1973:4)
Accounting is therefore basically regarded as a language of communication in an organization like every system of communication; its main purpose is to give different types of information to interested persons. Because of this main purpose, accounting forms a major part of the total information system in any entity, be it business or non-business. (Inanga 1983)
However, the following problems are encountered in the process of communicating this information.
These accounting concepts and conventions are seldom disclosed on the financial statement because they are generally accepted as being the undertaking of periodic preparation and presentation of financial statement; but, if in preparation and presentation of this financial statement, the fundamental concepts and conventions are not followed, problems will arise in analysis, interpreting and reporting financial statements. It is therefore essential for the understanding that the interpretation and meaningful analysis of financial statement that these basic concepts, assumptions, principles and conventions used in the preparation must be constantly borne in mind.
STATEMENT OF THE PROBLEMSThe following problems are encountered in the process of communicating information.
To this end, the problem of the study is that most accountants do not use accounting concepts and conventions properly in the preparation of financial statement.
THE OBJECTIVE OF THE STUDY
The importance of accounting concepts and conventions in the preparation of financial statement could be seen in the assessment of financial viability of an organization. The accountant prepares the financial statement of most organization. Accounting concepts and conventions help the accountant in giving relevant financial report to the management of any organization as regards financial report to the management of any organization. In order to demonstrate the role of accounting concepts and convention producing a viable financial report of any going concern, the following objectives are set out in this study:-
SCOPE OF THE STUDY
These examines how accounting concepts and convention help in the preparation of financial statement which are used in decision making and for evaluation of financial strength, profitability, and future protection of the organization.
However, it was not possible to cover all organization that use accounting concepts and convention in Nigeria. This is because much energy is required, it is expensive as well as time consuming.
The Nigeria Breweries PLC having been selected, the researchers’ attention was focused on the accounting department of the company. The purpose being to see how the accountant, prepares financial statement and to determine the effectiveness of the use of accounting concepts and convention in the preparation of financial statement, in other to attain corporate goals.
SIGNIFICANCE OF THE STUDY
As stated earlier, an understanding of the basic principle, concept, assumptions and conventions and their role, relevance to the preparation of financial statement is essential to the understanding, interpretation and meaningful analysis of financial statement. This study highlights the relevance and importance of these concepts and convention in financial reporting, thus enticing a better understanding of the usefulness of the financial statement to the various users of accounting information. These are the benefits the various users of financial statements gets;
The research questions are as follows:-
DEFINTION OF TERM The following words are defined as to be used in the study:-
ACCOUNTING CONCEPTS: Accounting Concepts are concepts that are associated with measurement of the elements of financial statements. These are various concepts and convention in accounting all of which are useful in solving practical accounting problems.
ACCOUNTING CONVENTIONS: They are the generally accepted approaches in applying the accounting concept.
CAPITAL EMPLOYED: This is the amount available for production. It represents the total less current liabilities employed in the business.
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