ASSESSMENT OF THE EFFECTIVENESS OF ACCOUNTING INFORMATION AS A TOOL FOR MANAGEMENT DECISION

The effectiveness of accounting information as a tool for management decision cannot be over emphasized. Accounting keeps the financial score for a business, it call attention to the problem and the opportunities that comfort the enterprise. Where action in needed, it suggests possible solution or answers.

Accounting is an intellectual discipline, we need a working definition, accounting is defined as the act of analyizing evaluating and interpreting an organization financial activities and communicating the result to those who are interested. It can also be defined as the process of identifying, measuring and communicating  the result to those who are interested. It can also be defined as the process of identifying, measuring and communication economic information to facilitate informed judgment to serve organization objectives. (According  to WALGENBACH, P.H.. ET AL 1977), in his book “Financial accounting and introductory”.

From the definition above, itr could be observed that accounting is not restricted to the recording of transaction in monetary terms but it also provide information to its users. Accounting can be widely classified into two categories, they are:

USERS OF ACCOUNTING INFORMATION

Accounting information are required and used by various classes of people e.g. owner of the business, the government, investors, employees and creditors.

Sizer john (1969): say that “ the owners of the business share performance, compare their organization with similar others to enable them decide either to increase or decrease their share in the company. Through the use of accounting information, the government can determine that business are meeting their legal obligation to pay taxes, contribute social security benefits for their employees and also satisfy other regulations such as those concerning the registration and trading of their stock.