Accounting deals with the keeping of records service of a special kind to any organisation, especially the entrepreneurs.
Accounting has been defined as the art and science of collecting data, recording classifying, summarising, analysing, interpreting, preparing and presenting the results of the financial transaction of any organization (both profit seeking and non-profit seeking enterprise) to the owners or other interest groups for decision making, while Book keeping is defined as the art of recording daily business transactions in a chronological and systematic manner so as to show the effects of the transaction between the firm and outsider and also to facilitate the ascertainment of the financial position of the firm at any given time and date.
For any form of business to grow, it must have proper accounting details s and regular financial reporting formula that provides vital information for decision making among alternative uses of scare resources. Every business enterprise (both small, medium or big) needs financial accounting information for knowing the past performance, planning, organizing, directing, executing, controlling of various resources and for decision determination in order to succeed and hit its desired goals.
Practical experience in the industry and empirical research have shown that the common attitude of an average entrepreneur in Nigeria towards maintain books of accounts and preparation of financial statements from such books for financial forensic decision making and performing – action has always been to keep those records he cannot avoid and any other records that are extremely critical to his business. This informed the reason why varying degree of incomplete records and single entry systems of accounting are commonplace and being maintained by entrepreneurs and other business organization.
In real sense, many entrepreneur’s may not have the interest to keep accounting records because of the foregoing reasons. This is the reality of the situation and the challenges in which the process of proper records keeping and the role of providing accounting information has to contend with.
Read Also:
How to Make Money from CAC Registration
The Process of Business Idea Generation
This unpredicted situations shouldn’t be the case in view of the overwhelming role accounting information plays in any organization. Besides, recording all transactions money that is received and all money that is paid out of the business and giving stewardship reports, accounting information serves as effective tools of planning, controlling scarce resources and execution of organizations policies and programmes in order to achieve the desired goal.
For any business organization to achieve its desired objective, it must use information as ingredient for decision making. The accounting information system is therefore charged with the role of transferring financial transactional data into useful data that will help not only the internal users of accounting information but also general users for decision making.
The Needs for Accounting Information
Many small and medium enterprise in Nigeria are either having survival challenges or have even folded due to neglect in the use of accounting information which is supposed to be a vital tool for ascertain enterprise performance and management in terms of decision making.
Based on this fact, it becomes increasingly necessary for managers to rely more on accounting information in its decision making skills, which is the key to successful enterprise planning whether small or medium.
Types of Accounting Information Entrepreneur Need
- The amount of earing/sales
- The amount of expenses (actual or national)
- The nature and value of assets owned by the business
- The nature and liabilities owing by the business
- Debtors list, creditors list
- The cash balance in hand and at the work
- The reconciled cash balance in hand and at bank
- The worth of the business or the owners equity
- The financial statement/documents necessary for bank loan
