ACCOUNTING AS AN INEVITABLE TOOL FOR BUSINESS MANAGEMENT (A Case Study of Guinness Plc)
The importance of accounting in the business world can not be over-emphasized. They have becomes the foundation on which the whole fabric of modern commerce rest.
This project, therefore, studies the importance of accounting as an inevitable tool in profit organization with particular reference to Guinness Nigeria plc. I discovered that Guinness Nigerian plc is a well-organized company it’s relevant to the industry from defining accounting and stating its relevance to the industry today. The study discussed the fact that even large organizations prepared and present very high standards of accounting records of their business.
Data analysis was by means of sample percentages and the chi-square method. The result of the analysis upheld the entire hypothesis put forward by the research.
TABLE OF CONTENTS
1.1 Background of the study
1.2 Statement of the problem
1.3 Purpose of study
1.4 Research question
1.5 Research hypothesis
1.6 Definition of terms
1.7 Significance of the problem
2.1 Historical background of Guinness Nig Plc.
2.2 Accounting Define
2.3 Objectives of Business Management
2.4 The Theory of profit Maximization
2.5 Relationship between Accounting and Profit Maximization
2.6 Limitation of Accounting
2.7 Accounting Profession
2.8 Double Entry system
3.2 Statement of research questions & hypothesis
3.3 Research design
3.4 Population of the study
3.5 Sample and sampling technique
3.6 Data collection instrument
3.7 Validity of the instrument
3.8 Reliability of the instruments
3.9 Limitation of methodology.
Background of study
The accounting system can be regarded as a universal phenomenon needs not only by individuals but also by organizations. For this reason, bookkeeping and accounting records need to be properly scrutinized and analyzed. It can be truly said that the accounting system has become the foundation on which the whole fabric of modern commerce rest. A business transaction can only be carried out in the crudest forms and development for the modern credit system.
With it, obvious advantages of convenience would have been totally impossible.
Accounting as a record-keeping process has worked out gradually over many countries to save the changing and economic needs of society. As early as 300 B.C. clay tables were used in Babylonian Empire to record the various facts. Many of these records contain a list of events as they occurred or a list of good belonging to an individual or temple. Similar records have also been discovered describing business activities in ancients Greece, Egypt, and Rome. While this early record contained most inventories of goods and debt, the later record began a concern for compiling profit and loss for different ventures. Some additional advances in record keeping were made by church officials and the government during the middle ages. Although this early record is interesting. They add little insight to the development of modern-day accounting, which is based on the double-entry method.
Modern-day accounting has its origin in the double-entry keeping method by Italian merchants during the 12th and 13th centuries. Probably the most condition giving rise to this development was the rise in trade between medieval Italian cities and the east. The first complete description of the double-entry system included in a book called Suma de Arithmetica, Geometria, proportion et rationality (1494) by a Franciscan monk named Luca Pacioli two years after Columbia discover America.
Although the Suma was essentially a treatise on mathematics, it contained records that have developed gradually over the preceding 2 or 3 countries. Pacioli's description of the double process was included in other books and was used widely throughout Europe during the 15th, 16th, and 17th centuries. The double entry process becomes a basis for modern accounting procedures.
The industrial revolution in Europe during the 18th and 19th centuries produced many significant social and economic changes including a change from the handcraft production system to the factory system.
The factory system was based on the use of machinery and equipment to produce many identical products at low cost.
During the 19th and 20th century, corporations have become a dormant factor in the financing, producing, and distributing goods and services. These corporations are often large complex organizations whose owners demand accounting systems that can provide relevant and reliable information for use in evaluating the efficiency of operations.
Government organization and income tax legislation have resulted in increased demand for accounting systems. In both their record-keeping communicating functions, The double entry system developed by the Italian merchants is essentially the same system used today to satisfy the increased demand for accounting information and the change of handicraft production system to the factory system, helps in producing much identical product at low cost with the use of machinery which helps in Maximization profit.
1.2. STATEMENT OF PROBLEM
a) Inefficient system of accounting, which leads an organization into several financial difficulties.
b) Most organization fails to install a sound accounting system which makes transactions not properly recorded, thereby leading to deficiency and lack of progress in such an organization.
c) Organizations find it difficult to ascertain whether they are making a profit or loss since as they produce they sell and use up the money without bothering to keep records.
d) Inability of the organization to forecast, make decisions about the future financial position, and potential outcomes of various alternatives that are considered.
e) Failure to determine the economic effect of past decisions on the organization which is actually communicated by means of periodic financial statement.
f) Inability to keep track of a wide range of items to meet the financial system requirement and safeguarding the assets of the business as part of the responsibilities of the company.
g) Laxity or slackness on the record-keeping process of the organization which definitely leads to fraud.
1.3 PURPOSE OF STUDY
a) To ensure that there is an efficient system of accounting in place in the organization so as not to get into serious financial difficulties.
b) To ensure that a sound accounting system is installed in the organization to ensure proper recording of transactions thereby leading to visible progress in the organization.
c) To ensure that the financial position of the organization can be determined at any point in time.
d) To ensure management determine the economic effects of the past decision on the organization.
e) To ensure that there is a reliable record-keeping process, so as to eradicate fraud completely in the organization.
f) To ensure the organization keeps track of its wide range of items in other to meet the financial system requirement and safeguard the assets of the organization as part of the responsibilities of the management of the company.
g) To enable the management to forecast and make decisions about the future financial position and potential outcome of various alternatives that are considered.
1.4. RESEARCH QUESTIONS
i) Is there any relationship between accounting records and profit Maximization?
ii) Does the continuous use of the accounting system tends to increase the proper recording of transactions?
iii) Does a constant change in our economy increase the use of accounting systems?
iv) Does the reliability of internal control lesson/ reduce the risk and facilitates the detection of fraud?
v) Does inadequate use of an accounting system limit our ability to assess our financial position.
1.5. STATEMENT OF HYPOTHESIS
i) That the continued use of accounting records tends to increase the proper recording of transactions.
ii) That inadequate use of the accounting system limits our ability to ascertain our financial position.
iii) That the more reliable the system of internal control the less the risk and the more it facilitates detection of errors and frauds.
iv) That constant changes in our economy facilitates an increase in the use of accounting system.
DEFINITION OF TERMS
i) Accounting Bases:- These are the method for applying fundamental accounting concepts to financial transactions which are Accrual base, cash base, etc.
ii) Revenue:- These are income benefits or resources earned or generated by the organization from Themselves. In another word, they are derived from the business or operational activities of the organization.
iii) Expenses: Is the amount incurred or due for the benefit derived in commercial transactions; it is also any amount paid out as a result of goods, services or assets received, or amount exchanged for the benefit received e.g. rents, electricity, and purchase of goods for resale, etc.
iv) Bad dept:- These are debts that are not recoverable from the debtors. This is as a result of the inability to pay a debt or the disappearance of the debtors.
v) Long term liabilities: - These are indebtedness of an organization that will take more than one year before being repaid. E.g. Debenture, Long-term loan, etc.
vi) Tangible Assets:- They are assets that have a physical identity and also have futuristic benefits i.e. they are assets that can be seen, felt, and touched e.g. buildings, plants, etc.
vii) Waste assets:- These are the long-lived resources of a business that can be exhausted or used up without replacement e.g. queries, oil well, etc.
1.8. SIGNIFICANCE OF THE RESEARCH PROBLEM
a) Accounting information helps the decision-makers to make a good decision in business management.
b) It helps the business management to have permanent records for all transactions made.
c) It helps an organization to determine the profitability of a business concern.
d) Accounting information helps in preventing the business management from fraudulent practice.
It helps business management to know the economic importance of any past decision..