Accounting Research
Accounting Research
Hossana Branch)
June, 2016
Hosanna, Ethiopia
Acknowledgement
First and for, I would like to prize the almighty God his unspeakable supports, saint virgin marry
for her special motherly contribution, angles and saints that protect me through all of my voyages
without interruption.
Secondly, my heartfelt appreciation and special thanks goes to my families for their moral
(psychological), financial and materials supports which enable me to reach here.
Thirdly my gratitude goes to my sincere and genuine advisor Abdulenja (MSA) for his
constructive and valuable comments and guidance in the preparation of this paper.
Lastly, I would to express my appreciation and greatest thank for Awash International Bank
employees and manager for their heartedly wiliness and support to give valuable information for
my study.
Abstract
Accounting information is the most important requirement for decision makers to achieve the
banks objectives. Availability of adequate accounting information plays a great role in decision
making process such as to decide the lending and borrowing policy of the bank.
Every bank workers should know the role of accounting information’s in decision making
process. The main objective of the study is to assess the role of accounting information in
decision making process of Awash International Bank in Hossana Town Branch. The specific
objectives are also the assess how accounting information is reported to decision makers to
evaluate how decision makers use accounting information in decision making process and to
identify the factors that hinder the role of accounting information not to play its role in decision
making process.
Problems commonly occur when accounting information is not used as does not play its
important role in decision making well. To evaluate and examine this problem the researcher use
the census of complete numeration to collect data from workers of the bank. The collected data
were both primary and secondary sources. The research mainly used the mainly used the
primary source include questionnaires and unstructured interviewees. The secondary data
sources of data was collected from different written material for example internet. The research
used mixed Research design that is both qualitative and quantitative.
The collected data was analyzed and interpreted with explanation finally summary of major
findings taken from the study financial and managerial accounting information are used for
banks decision making and the majority of the respondents agreed on its difficult to get easily
available accounting information to decision making. The researcher conclude that the financial
statement of the bank were prepared at the end of the fiscal year however the accounting
information is not properly reported to decision makers also to different problems like, error in
recorded keeping of business transaction and inaccurate and irrelevant input data during
customer from service period.
The researcher also recommended since, the accounting information plays a vital role in
decision making process of one organization the Awash International Bank accounting
information should be relevant for decision makers and the bank should create awareness and
improve its functional workers in the use of accounting information in decision making process.
Table of Contents
Content Page
CHAPTER ONE
1. INTRODUCTION
1.1. Back ground of the study..............................................................................................1
1.2. Statement of the problem .............................................................................................1
1.3. Research questions ..................................................................................................................3
1.4. Objectives of the study...............................................................................................3
1.4.1. General objective ..................................................................................................3
1.4.2. Specific objectives ................................................................................................3
1.5. Scope of the study
1.6. limitation of the study
1.7. Significant of the study...............................................................................................4
1.8. Organization of the paper .............................................................................................4
CHAPTER TWO
2. Literature Review .............................................................................................4
2.1 Theoretical Literature Review
2.1.1 Accounting Information and Decision Making
2.1.2 The Accounting Information and Function
2.2 The Value of Accounting Information
2.3 Types of Accounting Information
2.3.1 Managerial Accounting Information
2.3.2 Financial Accounting Information
2.4 Decision Maters
2.5 Decision Making Process
2.6 The Role of Accounting Information in Decision Making Process
2.7 Financial Statement and its Role in Decision Making
2.7.1 Income Statement
2.7.2 Balance Sheet
2.8 The Accounting Information and Accounting Cycle
2.9 The Empirical Literature Review
CHAPTER THREE
3. Research Methodology
3.1 Introduction
3.2 Research Design
3.3 The Study Population
3.4 Sampling Method and Sample Size
3.5 Data Collection Instruments and Procedures
3.5.1 Primary Data Collection
3.5.2 Secondary Data Collection
3.6 Data Processing and Analyzing Method.
CHAPTER FOUR
4. Presentation, Analysis and Interpretation of Data ........................................................................
4.1 Primary Data Analysis ................................................................................................................
4.1.1 Profile of Respondent ..............................................................................................................
4.2 Analysis of the Role of Accounting Information Decision Making Process...............................
4.2.1 Role of Accounting Information in Decision Making Processes..............................................
4.2.1 Accounting Information is Properly Reported to the Decision Maker ....................................
4.2.3 Efficient Use of Accounting Information by Manager’s .........................................................
4.2.4 Problems related to with use of accounting information in decision making process. ............
CHAPTER FIVE
5. Finding, Conclusion and recommendation ...................................................................................
5.2 Conclusion ..................................................................................................................................
5.3 Recommendations .......................................................................................................................
Reference
Appendix
CHAPTER ONE
1. INTRODUCTION
See the problems that affect the decision making process if the workers do not use
the following general accounting principles (GAAP).
Decision making process the bank used to decide about the role of accounting
information that plays its important role for the bank concerned to managerial or
financial decision making processes, how accounting information is properly
reported to decision makers and how properly reported accounting information is
important for decision makers and used for internal and external users (Mengistu
Bogale, 2008,).
In addition to this the researcher would concerned how decision makers use
accounting information in decision making efficiently. Efficient accounting
information would be used for them to now the performance of the bank and its
current and future situations to identify.
The last issue is also the factors that hinder the accounting information not to play
its role in management decision making process of the bank so the researcher tries
to identify such problems concerning to the issue (Anderson, 1990).
Research questions
How accounting information is properly reported to decision makers?
How accounting information plays its important role in decision making
process?
How decision makers use accounting information in decision making
process?
1.3. Objectives of the study
1.3.1General objective
The general objective of the study is to assess the role of accounting information in
the decision making process in the case of Awash International Bank in Hosanna
Town branch.
This study was tried to achieve the following specific objectives concerning to the
role of accounting information in decision making.
The study was identified the problems concerning to the role of accounting
information in decision making in the organization and emphasis the following
points.
It will help to Awash International Bank decision makers and organizations to
overcome the problem arising from in efficient processing of accounting
information. It will access the students for knowledge of accounting
information in decision making. It will use to perform better study on filed and
come up with relevant information for future researchers
The study has organized in five chapters. The first chapter has concerned with the
background of the study, statement of the problems and objective of the study,
scope of the study, significant of the study and limitation of the study. The second
chapter deals with review of literature. The third chapter deals with research
methodology,. The fourth chapter deals with data analysis and interpretation, The
fifth chapter deals with major finding, conclusion and recommendation.
CHAPTER TWO
2. Literature Review
The accounting information provides the basis for making decision about resources
allocation. Most business decisions cannot make without careful analysis of
relevant information. The accounting function is the financial information of the
bank. In this regard accounting plays important role in transaction processing,
capturing and recording events. Accounting information is essential to the decision
making process. If provides information for three functions: planning, controlling
and evaluating.
The value of accounting to user’s are defer main by its reliability. The purpose
information is to lead the user’s to desired action for this to happen information
must pass certain attributes, relevance, accuracy.
Accounting and accounting information are used more widely that commonly
realized. The users of accounting information can be divided roughly into three
groups.
I. Management:
It the groups of people who have overall responsibility for operating
business and for meeting the banks goals. Management may include the
owner, in large business management more often consists of people who are
littered. Business organization have many varied and often complex
objectives. Thus includes mantling an accepted level of earnings and
providing services. To accomplishes these and other tasks the companies
must be successful. Managers should decide what to do, how to do it and
whether the result mach their goal. Manager’s consistently make the right
decisions on the basis of timely and valid accounting information what was
the company’s net income during the period.
II. Users with a Direct Financial Interest
Another major function of accounting is to measure and reports information
about how to perform. Most business periodically published asset of general
purpose of financial statement that report their success in meeting the
objective of profitability and liquidity, these statements show what has
happened in the past and are important indicators of what is going in the
future, many people outside the bank carefully study these financial reports
including,
1. Present or potential investors: thus who invest or may invest in a bank
are interested in the past success of the business and potential earning
before investing the investor reviewing the bank’s financial statement.
2. Present or potential creditors: most companies borrowed money for
long and short term operating needs creditors those who lend money
or rendering services before being paid it must analysis a company’s
financial position before they make alone to the company.
III. Users with Indirect Financial Interest
Society as a whole through government and public group in recent years has
become one of the biggest most important users of accounting information.
Users who need accounting information to make decision on public issues
including: tax authorizers, regulatory agencies, economic planners and other
groups. (Needless, 2002).
Decisions making is the act of decision between two or more alternative course of
action. In running day to day business activities accounting information and
techniques are used to financial decision making process (Ahuja, 2006).
2.6 The Role of Accounting Information in Decision Making Process
There are many use of accounting information in decision making. Managers scan
account records to spot problems are to focus on, lenders use accounting records to
determine risky loan founds to a company might be, tax authorities can decide it
bank has paid the right amount of tax by analyzing the firms accounting
information. There following activities are also made based on the accounting
information:
Investing decision
Management decision
Lending decision
Taxes (Anderson, 1990).
Financial statements: are the accounting reports that provides the accounting
information to the users. A bank often provide as accounting information to
managers’ and other decision makers in its financial statements. The statements are
useful because they describe the banks financial health and performance in
accoutered and highly informative format because they provide an overall view of
the entire banks through accounting information financial statement are good place
to study.
Income statement is useful because its shows whether the business earned a
profit/net income. A bank earns a net income its revenue excess its expenses. A
bank incurs loss if its expenses exceed its revenues. So managers consider all those
to make decision.
Expenses: are out flows or the using up of assets as a result of the major or central
operation of a business it may occur as increase in liabilities.
The purpose of the balance sheet is to provide information that helps uses
understand a bank’s financial status as a result, the balance sheet is often called the
statement of financial position. The balance sheet describes financial position by
listing the types and dollar amount of assets, liabilities and equity of the business.
Liabilities: are probable future sacristies of economic benefits arising from present
obligations of a particular entity to transfer assets or provide services to other
entities in the future as a result of past transactions or events.
Equity: is the residual interest in the asset of an entity that remains after dedicating
its liabilities in the business equality is called the ownership interest. (Smith, 1989)
Financial reporting intended to provide information that will be use full in making
decisions. This objectives influences accountant’s prepare accounting information
for financial purpose. It also decision oriented objectives were specified the way
data measured and reported would change grammatically (Harrison, 1989).
3. Research Methodology
3.1 Introduction
In order to conduct this research, methodology is one of the important parts. This is
because without research methodology research cannot be done. In addition to this
research was contained important points such as population, sampling method,
research design and data collection procedures.
The research was used both qualitative and quantitative techniques to analysis
collected data. Because to describe the collected data about the role of accounting
information for decision making this techniques are suitable. Why because mixed
type of research; provides strength that offset the weakness of both type of
research, can be easy to develop and test a new instrument (phenomena) and used
to adders questions at different level (Black, 2010).
In conducting this research, the research would use the managers, accountants and
the economists of the Awash International Bank workers who are voluntary to give
available and reliable information about the role of accounting information
decision making in the bank. Currently, the bank has 11 staff members of total
works. There are one managers, one auditor, one accountant, and eight customer
service render get population for study was employed available of Awash
International Bank Hosanna Branch.
3.4 Sampling Method and Sample Size
In conducting this research, the research would use non probability sampling
technique that is censes. Because in order to acquire the relevant data the
researcher would draw census or complete numeration which enables the
researcher to reduce sampling error and to get detail information from the target
population (Black, 2010) business statistics.
The sample size is 100% of the total population because in census the total
population and the sample size are equal.
The primary data would be collected from in depth interview from the employees
of the organization and the researcher dominantly used the primary sources.
The secondary data was collected from different written materials for example
internet.
After collecting data the researcher would try to edit, code and classify the
collected data. The researcher would be used instruments of electronic calculator
of change the data in the form of percentage. The researcher would used
descriptive and interpreting of the collected data by using the researcher would be
presented the research finding reports, conclusion and recommendations.
CHAPTER FOUR
4. Presentation, Analysis and Interpretation of Data
This chapter deals with the presentation, analysis and interpretation of data gathered through
questionnaire and interview which were filled and answered by employees and manager of
Awash International Bank.
The total number of population in which the study was conducted to 11 employees. All
questionnaires 11(100%) distributed to employees are effectively responded and returned.
Interview was also conducted with the manager of the bank.
Thus, based on the data obtained from the population data is presented, analyzed and interpreted
by using tables and percentages.
As indicated the above table item number 2 regarding to the age of respondents about 8(73%) of
the total population are between 20-35 years old and the remaining 3(27%) are between the age
of 36-50 years. This shows that the majority of Awash International employees are adult. From
the above table item number 3 shows that the marital status of the respondents. It shows that
4(36%) of the respondents are single 7(64%) of the respondents are married.
From this the researcher can conclude that, the majority of the employees are married.
From this the researcher concluded that the majority of the Awash International Bank employees
are degree holders.
Accounting information pays a great role in decision making process, when the decision involves
business and economic questions. Accounting information is essential to the decision making
process. It provides information for planning controlling and evaluation of performance.
Table 4.3 Role of accounting information in decision making process of Awash International
Bank
Strong Disagree
Total 11 100%
As the above table shows that 2(18%) of respondents are strongly agree with the accounting
information role in decision making processes of the bank, 7(64%) of the respondents agree and
the remaining 2(18%) of the respondents are neutral. This shows that accounting information
plays a great role for bank. Since it provides relevant of information for decision making.
4.2.1 Accounting Information is properly reported to the Decision Maker
In order to make a good decision accounting information prepared by the accountant, should be
understandable and timely reported for decision makers and report in the form of financial
statement.
No
Total 11 100%
The above table 4.4 shows that 4(36%) of the respondents said that the bank prepare its financial
statement monthly, 3(28%) of the respondents said that the financial statement is prepared by
semiannually and the remaining 4(36%) of the respondents also said that the bank prepares its
financial statements annually. The monthly and semiannually prepared financial statements are
used to know the frequent intervals how things are going they prepared. Normally, financial
statements are prepared of the end of the year and used for external and internal users.
Table 4.11 Effective, accuracy and reliability of accounting information in decision making
process
When you perform day to day activities it may occur problems regarding to the use f accounting
information in decision making process. Table
4.13 Problems related with the use of accounting information in decision making process.
Analysis of interview question that is provided by the manager of Awash International Bank.
2. Factors affect or hinder accounting information not to play its role in decision making
process of the bank are
The manager replies that the factors that affect the accounting information not to play its
role for Awash international bank is the system installed that affect the banks day to day
activities not fast to transmit information and not to do works properly, efficiently,
relevantly and accurately data during the recording time of customers. The electric power
problem, lack of high qualified professional workers related to the accounting
information are the factors for Awash International Bank.
Based on the analysis and interpretation results of the study on the role of accounting
information in decision making the researcher has drown the following finding, conclusion and
recommendations.
The researcher has assessed the role of accounting information in decision making
process of Awash International Bank. From the study the following findings are
identified.
Accounting information plays a vital role of a bank in decision making process since, it is
provides relevant records of customer information during customer from service.
The majority of respondents said that accounting information is important for
management bodies to plan the lending and borrowing policy of the bank.
Financial and managerial accounting information are style managerial accounting is
important of provide information about the banks future operation plans and to develop
the overall objectives of the business strategy of Awash International Bank.
The majority of respondent also agreed that the financial statements of the bank are
prepared annually at the end of the fiscal year.
The preparation of financial statements for the bank is based on the principle of GAAP.
The majority of the respondents were agreed that it is difficult to get easily available
accounting information for decision making of the bank due to the net work breakdown
and misstatements in accounting records on time accounting information for decision
makers.
The majority of respondents said that there are problems related with the use of
accounting information in decision making process are inaccurate and irrelevant data
recording during customer’s front service time, in efficient financial statements and errors
in business transaction records.
5.2 Conclusion
The researcher was conducted it senior essay study in Awash International Bank to assess the
role of accounting information indecision making process. the researcher was conducted on 11
workers of Awash International Bank that is the total target population as collected the data
through using of questionnaires and interview of Awash International Bank that is the total
population as collected the data through using of questionnaires and interview of the awash
international bank manager’s.
Based on the major finding of the study the following conclusion is drawn.
Following the identification and based on it the researcher has come up with the following
recommendations.
Since, the accounting information plays a vital role in decision making process of once
organization. The Awash international bank accounting information should be relevant
for the decision makers. The accurate, relevant data for managers to decide about the
banks’ present and future plans and to achieve the banks objective so, the accounting
information should be relevant for users.
The Awash International Bank should also prepare its financial statements frequently
with the period of weekly and monthly in addition of semiannually as much as possible
because different internal and external users use it frequently. When financial statement
are prepared weekly and monthly they help the bank to know day to day performances
and to focus on how the business is going on.
The Awash International Bank should improve the skill and knowledge of its functional
worker’s who, are participated on the banks activities especially on the use of accounting
information for decision making process through, giving training and development
program about how to gather the accounting information according and reporting the
accounting information in decision making process.
The bank should also create awareness and enough understanding about the use of
accounting information in managerial decision making process who because the
management is important that control the banks day to day’s activities and decide on
behalf of the bank so that, the management should be enough understanding in the use of
accounting information for decision making process.
Awash International Bank should be also solve the problems related with the use of
accounting information in decision making process through, making the input data
customer front services accurate, relevant, using on time and update the system
connection to be fast for using of accounting information for decision making process
other on is keeping records properly, availably and transfer on time accounting
information for decision makers through, reduction of the errors that are occurred during
business transaction and preparing of financial statements.
The Awash International Bank is also the problem of electric power supply so the bank
should give due attention for this because the electric power is important for performing
the day to day accounting information activities for the bank so, this problem should be
identified and to be substituted by generator incurring additional cost for it and give
adequate service for customers without any power problem.
Reference
The respondent kindly requested to give relevant information and your cooperation
is valuable and complete response will be keep confidential and used only for
academically research purpose.
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