This research work was carried out to know the Relevance of accounting
information in decision making process using United Africa Company (UAC) of
Nigeria PLC as a case study. The objective of this study is to examine the
usage level of accounting information and to show how accounting information
assist in decision making, the purpose and significance of the study were
highlighted, in addition the limitations and scope of the study was also
discussed, research questions raised and hypothesis stated.
Relevant literatures were reviewed; the perspective of society in general
and in decision making in particular towards accounting, accounting information
system, decision making process, users of accounting information,
characteristics of accounting information, usefulness of accounting information
and problems of accounting information.
The methods adopted in data collection, population selection, sampling
technique adopted and methods of data analysis where critically discussed.
Data was presented and analyzed using the administered questionnaire.
This was carried out to obtain adequate answers to the research questions and
also to test the hypothesis.
CHAPTER ONE: Introduction
Background of the study
1.2 Statement of
1.3 Purpose of the
1.4 Significance of
1.5 Scope and
limitation of the study
1.6 Research question
on statement of hypothesis
1.8 Definition of
CHAPTER TWO: Literature
2.1 Nature and
Objective of Accounting Information
2.2 The perspective
of society in general and in decision making in particular towards accounting
centralizing effects of accounting
2.5 Decision making
and accounting information
of accounting information
of accounting information
2.8 Sources of
of accounting information
of accounting information
CHAPTER THREE: Research
of research questions and hypothesis
and collection of data
CHAPTER FOUR: Data Presentation and Analysis
and analysis of data according to research questionnaire
4.4 Testing, analysis and interpretation of
CHAPTER FIVE: Summary, Conclusions and Recommendations
5.3 Summary of findings
5.6 Suggestions for further studies
1.1 BACKGROUND OF THE·STUDY
Decision making is a comprehensive process that comprises with
identifying the problems and decision criteria, allocating weight to those
criteria, moves to developing, analyzing and selecting an alternative' that can
resolve the problem, implementing the alternative and ending with the
evaluating the decision's effectiveness. Accounting information relates to the
output of accounting department of an organization it is provided through
collection, analysis, presentation and interpretation of data and information
from other department in term of monetary values.
Accounting information is a major means of helping managers of
organization equity investors of an organization, potential equity investors,
creditors and bond holders of an organization, supplier’s and customers of an
organization and other stake holder to take decisions.
Accounting provides information for three major purposes:
Reporting: these reports are used by investors, creditors, government authorities
and other outside parties
Routine Internal Reporting: these reports
which are periodically generated are used by managers of· the company for their
Internal Reporting: this information or reports are generated to support
projects and other decision that comes up as the need arises from them.
The role of accounting information in business decision making process
can be likened to the role of a captain of a sailing ship. The prudent t
captain studies his charts before setting sail, then sets a course for his
destination, knowing where he wants to be at a particular point in time, he
checks his position continuously, taking correction action if he is off course.
The weather may be uncertain and unpredictable and the seas uncharted, but with
necessary instruments even the smallest boats can come through the most severe
By simple analogy a good accounting information system enable management
direction and other users of information know where they are, where they are
going and how to get there using appropriate management tools.
Thus the main focus of this project is to establish the impact of
accounting information vis-a-vis decision making from the point of view of a
major user of accounting information United Africa Company of Nigeria (UAC)
Nig. PLC .
1.2 STATEMENT OF PROBLEMS
In a corporate setting, the decision makers (managers) are generally
distinct from the owner of the business enterprise. In like manner, financial
managers' function involves three main types of managerial decisions.
One of the financial manager decisions is about investment.
The financial manager has not been able to evaluate efficiently and
effectiveness on the timing and the risk of future cash flows of investment due
to inaccurate account ting information on the state of liquidity of the organization.
Secondly, financial decision is also a financial manager responsibility
and the best financing mix or capital structure to finance the investment
decisions has not been utilized due to poor accounting information system.
Thirdly, dividend decision which involves determining how much should be
paid out of the firm's earnings to the shareholders as dividend and how much is
to be retained cannot be ascertained due to lack of the knowledge of accounting
tools for analyzing is accounting information.
1.3 PURPOSE OF THE STUDY
The relevance of accounting information as a tool for business decision
cannot be over emphasized. The objectives of this study are stated below:
To ex-ray and establish that accounting information assist
To examine the
usage level of accounting information
To assess the significance of quantitative and qualitative
To show the necessity of accounting information and to
notify its sources.
5. To check
the performance evaluation
To show the influence of accounting information in
OF THE STUDY
This study is significant in many ways. Firstly, it is an in-depth study
on the importance of accounting information as a decision making tools.
Secondly, it provides an overview of the constituents of accounting
information in use by a major use of accounting information (UAC NIG PLC). Put
simply, at the end if this study, problems associated with the generation of
accounting information would have been identified and solution proffered. 'the
assumption is that given the central rule of accounting in decision making and
organizational performance, problem identified and solution proffered would be
applicable to the various users.
Lastly, the impact of computer technology in generating and processing of
accounting information is recognized and appreciated.
However, this study would not involve this area. It is hoped that this
would constitute an investigative focus for future researchers.
1.5 SCOPE AND LIMITATION OF THE STUDY
This study shall be focus on the Nigeria companies using UAC NIG PLC as a
case study. Sample of population of study" shall be financial Manager,
chartered accountants, educationist in the field of the business administration,
students studying accounting and other related courses etc.
The major limitations of this study are as follows:
1. Statistics: The absences of
vital statistics that would have lent more weight to the conclusion. This is
not saying that conclusion reached in this study is baseless.
2. Confidentiality: Some information
that one would have like to feature in the study were considered to
confidential for purpose of this study.
3. Time: There is a
limited time going by the volume of work involved in a study of this nature.
1.6 RESEARCH QUESTION ON STATEMENT OF HYPOTHESIS The purpose of
this study has earlier been identified as that of establishing how accounting
information provides basis for business decisions. The following are the
Do companies rely on accounting information in decision
What are the problems inherent in the use of accounting
information as a tool for decision making?
How can problems of accounting information be solved or
What is the assessment of accounting information as a
basic tool for decision making?
The statement of hypothesis will therefore be a null and alternate. They
performance is not positively related to a good accounting information system
performance is positively related to a good accounting information system.
information has no bearing on the quality of business decision.
information has bearing on the quality of business decision.
information has no positive effect on shareholders' investment decision
information has positive effect on shareholders' investment decision.
1.7 HISTORICAL BACKGROUND
United Africa Company of Nigeria PLC (UAC) has a rich and varied history
that pre-dates the geographical entity called Nigeria. The rumps of the
Company's early days can be traced to the activities of European traders and
The Company has evolved through a series of mergers and acquisitions and
restructurings as the various entrepreneurs sought to enthrone profitable and
One of the most significant developments in the company's history was the
setting up of the Royal Niger Company, which was chartered between 1672 and
1750 to administer the territory that would later become Nigeria.
United Africa Company of Nigeria (UAC) NIG. PLC was originally establish
in 1879 as at trading company and was found following the merger of four
companies trading up the River Niger: Alexander Miller Brother and Company,
Central African Trading Company Limited, West African Company Limited and James Pinnock but became a
public company in 1974 to commence manufacturing In Nigeria.
United Africa Company of Nigeria is a fully owned Nigeria public company
and one of the largest diversified businesses in the private sector company
with over 190,000 shareholders. The company's business portfolio includes the
following companies: UACN Property Development Company PLC
(UPDC), the first company in the real estate sector to be quoted on the
stock exchange, warm spring waters Nigerian Limited, manufacturer of
"GOSSY" spring Water, the bottling plant is located in Ikogosi-Ekiti,
Ekiti State. The Company has majority stakes in Grand Cereals and Oil Mills
Limited (GCOML); Spring Waters Nigeria Limited (SWAN) and Option Leasing
Company Limited. UAC interests also include shareholdings in CAP PLC, UAC
Registrars Limited and GM Nigeria Limited as a joint venture with General Motors
Corporation of Detroit USA (300/0 equity), the world's largest automobile
manufacturer, Following the new pensions reforms in the country, UAC has registered
UNICO CPFA Limited, as a subsidiary of the Company.
UAC's Corporate Social Responsibility initiatives target the' educational
sector through interventionist programmes that seek to uplift the standards in
the sector and provide a more conducive atmosphere for sound academic
attainment. The Company's pilot Schools Support Projects have led to the provision
of various. Infrastructural assistance and facilities to schools in some of the
geo-political zones of the country.
The Company has, over the years, directed its. Corporate Social
Responsibility initiatives towards assisting communities, institutions and
charitable organizations and the award of scholarships.
Today, UAC has become a food focused conglomerate with leading brands
such as Mr. Biggs, Gala, Grand oils, Supreme, SWAN Natural Spring Water and
Gossy Spring Water. The company's brand portfolio also includes franchised
international food brand such as Nando's, Creamy Inn, Chicken Inn, Pizza Inn
The headquarter of UAC PLC is located at Niger House Lagos. Some factors
that aids the company's growth includes:
Good marketing skill
Standard quality of product
Winning with people initiative (WWP)
1.8 DEFINITION OF TERMS
Accounting Information System: This can be
defined as the means for collecting, collation, accumulation, analysis,
processing, reporting and interpretation in standard term, information about
the business to assist management it; planning, control and decision making.
Financial Analysis: It can be defined as
the relationship between financial data in the financial statement to assist or
aid In evaluating the financial condition and performances ofa firm or company
in a particular financial year and in accordance with the interest of various
users of the report
Liquidity: It is the ability of a company to meet
its financial obligations as they become due. It can also be referred to as a
state of solvency.
4. Insolvent: It is a state or
situation where as a company finds itself unable to meet its obligation as they
fall due. .
Generally Accepted Accounting Principles (GAAP): These are set of accounting concept used in the preparation and
presentation of financial statement. The fundamental accounting concepts
include: entity, going concern, periodicity, realization, matching,
consistency, historical cost and double entry.
Inflationary Economy: This is an
economy where its monetary value varies with time movement. It IS synonymous with
third world countries. e.g. Nigeria,
Ghana, India, Malaysia, etc.
Exchange Rate Flotation: This is the
rising and failing of the, value of local currency to that of its foreign
counterpart. This fluctuation has great impact on investment and decision making.
Budgets: These are plan of
what a business expects to accomplish and its incorporated target for
achievement, a budget is generally a financial and/ or quantitative plan of
operations for a forthcoming accounting period.
Financial Statement: This is a
sub-division of the content of an annual report and it provides summary
information to various users which enable them to know the profitability,
liquidity or general well-being of a company.
Capital Structure: The capital structure of company
could be described as the way in which a company is financed or being owned.
The capital structure of a company can be financed by equity finance and debt