The banker will not consider the financial statements which are more than ten years old. The Company has evolved through a series of mergers and acquisitions and restructurings as the various entrepreneurs sought to enthrone profitable and enduring enterprises. CFA® And Chartered Financial Analyst® Are Registered Trademarks Owned By CFA Institute.Return to top, IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials, * Please provide your correct email id. In such decisions, the joint product costs incurred before the split-off point are irrelevant and should be ignored. 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. Infrastructural assistance and facilities to schools in some of the geo-political zones of the country. THE RELEVANCE OF ACCOUNTING INFORMATION IN DECISION MAKING PROCESS (A CASE STUDY OF UAC NIGERIA PLC). Decision making is based on an evaluation of quantitative and qualitative factors. One of the financial manager decisions is about investment. In case joint products are on hand at the end of an accounting period, some value must be assigned to them. Problems have risen and the managers must now decide whether or not to market it. All e-mails from the system will be sent to this address. 5.2 Relevant Costs and Decision Making Model. Confidentiality: Some information that one would have like to feature in the study were considered to confidential for purpose of this study. How can problems of accounting information be solved or minimized? A scarce resource or a limiting factor refers to any factor that restrict or constraint the production or sale of a product or service. It is profitable to continue processing a joint product after the split-off point so long as the incremental revenue from such processing exceeds the incremental processing costs (separable costs). It should also be noted that the information should be timely. Make the decision. Segment report prepared on a variable-costing basis provides valuable information for these keep-or-drop decisions. Hi: Accounting information has positive effect on shareholders' investment decision. The e-mail address is not made public and will only be used if you wish to receive a new password or wish to receive certain news or notifications by e-mail. How does a company go about making good tactical decisions? The financial information must be timely to be relevant to the investors. 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. 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. 2. Here we discuss examples of relevance in accounting and how it is useful to managers, small shareholders as well as large shareholders. For example in make-or –buy decision, the quality of the product purchased externally, the reliability of supply sources, the expected stability of price over the next years, labor relations, community image and so on. The financial statement should be in proper accounting format. Using the space for storage requires that Beza forego the opportunity to rent it, which means that there is a difference to Beza if it chooses to take one action rather than another. Identify relevant information Here, the costs and benefits associated with each feasible alternative are identified. The major limitations of this study are as follows: 1. The contribution margin technique also applies here, because the product to be emphasized or the order to be accepted is the one that makes the biggest total profit contribution per unit of the limiting factor. In make or buy decisions, the appropriate means of analysis is to compare the relevant cost of buying the part with the relevant cots of making the part. 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. Any inaccurate information may be misleading. Â© var currentYear = new Date().getFullYear();document.write(currentYear);, All Rights Reserved. In short, accounting relevance should contain accurate and orderly information. This information will directly not be available in the annual report. Since the units being sold in the special order are not being sold through the firm normal distribution channel, the firm may or may not incur variable selling and administrative expenses in conjunction with the special order. Typically, the quantitative factors are those for which measurement is easy and precise. However, while segmented reports provide useful information for such decisions, relevant costing describes how the information should be used. 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 conditions. If a company wanted to take a loan from a bank, then the bank will want to know first whether the company will be able to pay them back the loan with interests.