EFFECTS OF ELECTRONIC ACCOUNTING ON THE CORPORATE PERFORMANCE OF ORGANIZATIONS (A STUDY OF ABBOT RESOURCES, ENUGU)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Accounting according to Adebiyi, (2010:12) is the measurement, processing and communication of financial information about economic entities. Accounting, which has been called the "language of business", measures the results of an organization's economic activities and conveys this information to a variety of users including investors, creditors, management, and regulators (Agbasi, 2008:43).

Anunolam (2006:88) defined accounting as the systematic and comprehensive recording of financial transactions pertaining to a business. Accounting also refers to the process of summarizing, analyzing and reporting these transactions. The financial statements that summarize a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period.

Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizeable finance departments with dozens of employees at larger companies.

Dreytus, (2009: 12) is of the view that the reports generated by various streams of accounting, such as cost accounting and management accounting, are invaluable in helping management make informed decisions. While basic accounting functions can be handled by a bookkeeper, advanced accounting is handled by qualified accountants who possess designations such as lCAN (Institute of Chartered Accountants). All accounting designations are the culmination of years of study and rigorous examinations, combined with a minimum number of years-of practical accounting experience.

Electronic accounting according to Eze, (2010:21) is the application of' online and internet technologies to the business accounting function. Similar to e-mail being an electronic versi on of traditional mail, electronic accounting is electronic enablement of lawful accounting and traceable accounting processes which were traditionally manual and paper-based.

Nweze (2008:56) opined that electronic accounting involves performing regular accounting functions, accounting research and the accounting training and education through various computer based /internet based accounting tools such-as digital tool kits, various internet resources, international web-based materials institute and company databases which are internet based, web links, internet based accounting software and electronic financial spreadsheet tools to provide efficient decision making.

Electronic accounting improve the corporate performance of organizations by enhancing its diverse accounting activities such as associated with accounts payable, accounts receivable, financial reporting and bank and account reconciliations. The above variables are the dependent variables which this study is meant to establish a relationship with the independent variable (electronic accounting).

1.2 STATEMENT OF THE PROBLEM

Using electronic accounting system comes with its own set of problems, such as the need to protect against data loss through power failure or viruses, and the danger of hackers stealing data. This can alter information on both accounts payables and receivables of an organization thereby affecting its overall performance.

Computer fraud is also a concern and situations where there are no systems of control to monitor access to accounting information can go to a great extent in affecting diverse activities of the organization. It could lead to wrong financial reporting or even poor bank and account reconciliations.

1.3 OBJECTIVES OF THE STUDY

The broad objective of this study is to appraise the effect of electronic        accounting.

The specific objectives include the following:

1.     To identify the effect of electronic accounting on the account receivables-of an organization.  

2.     To examine the extent to which electronic accounting have impact on account payables of an organization.

3.     To determine how electronic accounting impacts on financial reporting of an organization.

4.     To examine the effect of electronic accounting on bank and account reconciliations of organizations.     

1.4 RESEARCH QUESTIONS

The following research questions are stated for this study:

1.     Does electronic accounting have significant effect on the account receivables of an organization?

2.     To what extent does electronic accounting have impact on account payables of an organization?

3.     How does electronic accounting impact on financial reporting of an organization?

4.     Does electronic accounting have significant effect on bank and account reconciliations of organizations?

1.5 RESEARCH HYPOTHESES

The following hypotheses are formulated for this study:

HYPOTHESIS ONE

Ho: Electronic accounting does not have significant effect on the account receivables of an organization.        

HI:    Electronic accounting has significant effect on the account receivables of an organization.

HYPOTHESIS TWO

Ho: Electronic accounting does not have impact on account payables of an organization.

H1:   Electronic accounting has impact on account payables of an organization.

HYPOTHESIS THREE

Ho: Electronic accounting does not impact on financial reporting of an organization. .

HI:    Electronic accounting has impact on financial reporting of an organization.

HYPOTHESIS FOUR

Ho: Electronic accounting does not have significant effect on bank and account reconciliations of organizations.     

HI:    Electronic accounting has significant effect on bank and account reconciliations of organizations.

1.6 SIGNIFICANCE OF THE STUDY

This study will be of enormous significance especially to the management and staff of Abbot Resources Enugu as it will enlighten them on the diverse roles of electronic accounting in enhancing organizational performance.

The recommendations of this study will suggest for other firms on the strategies or diverse electronic accounting tools to promote organizational performance.

The general public will not just be enlightened on the concept of electronic accounting but will be made to understand how to apply its tools in their diverse businesses for enhanced performance. Students and other researchers will widen their scope from the information contained in this study.

1.7 SCOPE AND OF THE STUDY

This study covered electronic accounting in the corporate performance of organizations. It focused on Abbot Resources, Enugu.

1.8 DEFINITION OF TERMS

ELECTRONIC ACCOUNTING: This is the application of online and internet technologies to the business accounting function.

ACCOUNT PAY ABLE: This is an accounting entry that represents an entity's obligation to payoff a short-term debt to its creditors.

ACCOUNT RECEIVABLES: Money owed by customers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for.

PROFITABILITY: This is used primarily to describe any ongoing process is which a good or a service would produce more benefits than consequences.

FINANCIAL REPORTING: This is the process of producing the reports, called statements that disclose an organization's financial status to management, investors and the government.

PERFORMANCE: The accomplishment of a given task measured against present known standards of accuracy, completeness, cost, and speed.