CHAPTER ONE
INTRODUCTION
Financial accounting covers those activities related to the preparation of certain reports which are known as financial statement. These statements reports the financial status of a firm at a particular time the firms activities and resulting profit or losses during the most recent period and the flow of resources occurring within the firm during the same period. This statement made by A. THOPSON MONTAOMERY gives us an idea on the meaning of financial accounting. However the question arises what are the efforts of these financial account reports in the management of business? The answer poses a problem which the paper will seek to solve. Not all business persons understand the impact of financial accounting information on the management of their business, some manages business intuitively. Other, like traffic defaulters who disobey road signs, disobey the warning of communicated by financial accounting information and end up in a “Business Accident” There are other sources of information which have impact on the management of Business and the combination of these sources give an information system in the complex nature.
As FARM WOOD puts it, “it must not be thought that accounting of any form is the management control system. Instead it is part of it”. But accounting information is the only system through which both mangers and external users get a picture of the organization as a total entity. Moreover, financial accounting information usually comes in the disguised form by “wearing” the cloak of technicalities. Such technicalities include calculation which need expert knowledge in its interpretation. But when some business because of low financial layout, cannot employ such experts hands, they tend to ignore financial accounting information system which has an effect on the management of any business concern. The problem is: Do all businessmen know this? This is the question that the researcher seeks to answer also.
1.1 STATEMENT OF THE PROBLEM.
Is very important for the functioning of any business. The financial accounting system in most business organization do not portray fully the principles of accounting systems. The flow of information, the cost of collecting any information and the internal control procedures have some loops holes. In reality, it would be impossible for the researcher to study all the information system in all or even one of the organization. The study therefore involves a study of some typical financial accounting reporting on the management of a business.
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