THE EFFECT OF FINANCIAL ACCOUNTING REPORTING ON THE MANAGEMENT OF A BUSINESS.

CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

       Financial Accounting has help so much in the preparation of reports on the performance of a business. This report is executed through a means known as financial statement, which shows the details or activities carried on a business and its performance so far. The statement also reports the financial status of a firm at a particular time usually one year. It determine whether profit or loss is made in a business and the flow of resources during that period.

       International Accounting Standard Board (IASB) Changed the Financial Accounting and report section of the American Accounting Association (AAA) to report on papers and expose drafts relating to financial Reporting section of the American Association also made provision for comment letters which will help the managers or directors to manage the resource of the business with care and caution. Those who disobey the warning of communicated financial accounting information and up in a “business accident”.

       There are other sources of information which have impacted on the management of business, in which the combination of these sources gives an information system a complete nature i.e. why Farm wood said that “It must not be thought that accounting of any form is the management control system instead, it is part of it”. The financial statement of a business informs the external users on what is happening in the business but due to the preparation of the financial statement requires the employment of experts who has experience on the preparation. This has made some business with low capital to forfeit the preparation.

       This project help in knowing the effect of financial accounting reporting on the management of a business and its benefits to the world at large.   

1. STATEMENT OF THE PROBLEM

       There have been difficulties in reporting the financial accounting of a business. These difficulties can be caused by the following factors:

1. The cost of collecting any information and the internal control procedures have some loops holes.
2. The financial system in most business organization does not undergo in full the principles and guidelines of accounting system.
3. When there is element of fraud in the recording of the transaction of the business.
4. Poor flow of information about the business
5. The misrepresentation of information by the management or staff of business.
6. OBJECTIVES OF THE STUDY

This work is carried out for the achievement of the following objectives, which includes:

1. To determine the profit generated in a business at a given accounting period usually a year.
2. To find out how the financial Accounting reporting effects the management business.
3. To examine why financial accounting reporting is used in decision making in a business.
4. To determine why financial statement is used in monitoring the activities of a business.
5. To review the extent at which reporting of financial accounting has help in maximizing the scope of the business.
6. RESEARCH QUESTION

The Research question listed below will help in the achievement of the objective above.

1. How can the profit generated in a business be determined within a given accounting year?
2. To what extent does financial accounting reporting effect management of business?
3. How can financial accounting reporting be used in decision making in a business
4. How can financial statement be used in monitoring the activities of a business
5. To what extent has the reporting of financial accounting helped in maximizing the scope of the business
6. SIGNIFICANCE OF THE STUDY

At the end of this work, it is expected that it will help to improve the financial reporting standard of businesses, what effective management of the business will be reached.

       It will also be useful in examining and evaluating the effect of financial accounting as information system and directing the business person to such effect.

       The research will be useful in warning not only business person but any person who neglects financial accounting, this will lead to obedience of financial statement prepared.

       It will also serve as a reference purpose to the users of accounting information such as shareholders, government, customers, investors etc.

1. SCOPE OF THE STUDY

The research work will base its attention on Emenite Ltd with reference to the effect of financial reporting on its management. It shall also draw ideas from textbooks in all forms or branches of Accounting. It will cover the past and present financial accounting reporting on the management which will help in the planning and budgeting for effective financial reporting in the future.

1. LIMITATION OF THE STUDY

During the Research findings, there were limitations encountered in carrying out the work. Those limitations include the following factors:

Time: The Researcher is a student and has limited time to carryout the research due to his lecturers and other functions or activities embarked on the school.

Finance: The Research requires huge capital i.e. it capital intensive and the Researcher has limited capital to carryout the work because she is a student.

Scope: The scope covered by the research work is voluminous. This has made the research not to cover all the areas needed but made use of sample study which she generalized on the population.