PROPER ACCOUNTING INFORMATION AS A TOOL FOR MANAGEMENT DECISION MAKING (A CASE STUDY OF ALO ALUMINUM)

CHAPTER ONE

1.0     INTRODUCTION

1.1     BACKGROUND OF THE STUDY

          The owner of a business naturally wishes to run his business as efficiently as possible. One of the coordinal purposes of keeping accounts is to enable him to do this. His accounts should tell him the exact cost of what he is selling, the exact amount of each expense which is involved and the exact revenue of the business.  

          With such information, the owner of the business can make comparison from year to year. Comparing the profit this year with the preceding years and investigate the causes of any difference. This is, by making comparison of the expense incurred.

          By studying his accounts in this manner, the business manager can now formulate a business policy. He may, for instance take a discussion whether to rise or lower prices of his products; to embark on advertisement or not. To change the method of production or to change the organizational structure.

          To ordinary man in the street, Account means story, explanation, or report of money received and spent.

          In the remote past, the actual record – making is called “Book-Keeping”. However, accounting today extends beyond book-keeping.

          According is a discipline concerned with the recording, analysis, and forecasting of income and wealth of business and other terms, the flow of economics values between or within economic entities.

          According to (Wood’s 1982), “accounting is said to be the language of business”. At a given time, Accounting made it possible for a businessman to discover;

The value of his in-put and out-put

The available cash/bank balance