THE IMPORTANCE OF ACCOUNTING RECORDS IN PROFIT MAKING ORGANIZATION A CASE STUDY OF ESCO SUPERMARKET, WARRI, DELTA STATE

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THE IMPORTANCE OF ACCOUNTING RECORDS IN PROFIT MAKING ORGANIZATION A CASE STUDY OF ESCO SUPERMARKET, WARRI, DELTA STATE

TABLE OF CONTENTS

Title Page i

Approval page ii

Dedication iii

Acknowledgement iv

Table of contents v

Abstract viii

CHAPTER ONE – Introduction

Background of the study 1

Statement of the study 2

Purpose of study 3

Research question 3

Significance of study 4

Scope of study 4

Limitation of study 4

Operational definition of terms 5

CHAPTER TWO – Review of Related Literature

Introduction 8

Profit Making 9

Types of Account 12

Accounting 13

Financial Accounting 15

Cost Accounting 16

Management Accounting 16

The Nature and purpose of Accounting 18

Grouping of Accounting Books 18

Reasons for Subsidiary Books 19

Ledgers or Principle Book of Account 23

Final Account 24

Statement 24

Trial Balance 24

Balance Sheet 25

The Importance of Book-Keeping and Accounting 25

Importance of Bookkeeping and Accounting to Business

Organisation 27

An Illustration which Demonstrate Double Entry

Record of Bookkeeping 28

CHAPTER THREE – Research methodology

Introduction 29

Research design 29

Area of the study 29

Sampling size and Sampling procedures 30

Research instrument 30

Validation of the Instrument 30

Reliability of the Instrument 30

Data collection Method 31

Method of data analysis 32

CHAPTER FOUR – Presentation and data analysis

Introduction 33

Data presentation 33

Findings 36

Summary of the Analysis 38

CHAPTER FIVE – Summary, Conclusion and Recommendations

Summary of findings 39

Conclusion 39

Recommendations 40

References 42

Appendix 42

Questionnaire 44

CHAPTER ONE

INTRODUCTION

Background of the Study

In turbulent time, an organisation has to be managed properly in order to withstand the changes in the environment and to protect itself from unexpected events such as business failure and eventual winding up. In every profit seeking organisation, financial management is very necessary for proper accounting record and investment decision. Therefore, the success or failure of the enterprise solely depends on the financial management. Most enterprises have had some outstanding success while others have been dismal failures.

An organization in this context is more than a group. It is something more than a casual human assemblage such as a social part or a class of accounting students.

According to Drucker, an organization is defined as a concrete social process with more definable boundaries through which interaction must take place and by striving towards goals requiring mutual effort”. Organisation can also be defined as a system of coordinate activities by two or more participant in order to actualize common goals.

The need for account record in our economy becomes obvious in Nigeria during the Nigeria enterprises promotion decree of 2003, when the problem of inadequate manpower to replace the foreigners became evident. This therefore called for training of more accountants from our universities and other higher institutions, such as polytechnic and colleges of education. Needs for organisation to keep financial accounting record is to know how much profit they make from trade and what their financial position is at a giving time.

Hence, Wanogho (2006), define accounting as a process of recording classifying, selecting, measuring, interpreting and communicating all financial data of an organisation to enable users make assessment and decision.

Statement of the Problem

The importance of accounting in profit making organisation is of a significant nature. But some business organisation has been faced with some problems which resulted to their winding up. Some of these problems are viz:

Lack of systematic records for financial transaction.

No record for the value of asset and liabilities record.

Lack of recording and assessment of profit or loss made at given time.

Lack of recording the value of expenses.

No provision for financial record used for comparative purpose.

Lack of position and improvement in the efficient running of a business over a period.

Lack of distribution of funds (i.e. loan and other resources).

Objectives of the Study

This research will help many business concerns on how to run a profit making them understand the importance of accounting in the following ways:

According enables business organisation to keep their record so that the business man will know the profit made or losses incurred in a given period.

Help to know the financial position of a business at any determined period.

To know how much tax is to pay after the declaration of profit.

Reduce cases of fraud associated with improper record keeping by management.

Research Questions

The questions asked in this study are viz.

Are the recording of financial transaction important in profit making organisation?

Will the lack of recording of value asset and liabilities any effect in profit making organisation?

Are the assessment of profit or loss important in profit making organisation?

Are the lacks of recording of the values of expenses any affect on profit making organisation?

Are the record of provision for depreciation important in profit making organisation.

Significance of the Study

The significance of this study is to highlight the visible importance of accounting record in profit making organisation. This research will be of a great aid to government and private organisation (both large and small scale business) in enlightening them on the importance of accounting and recording the day to day activities or informed in profit making organisation.

Scope of study

The research work of this nature is a lengthy one and the research, though intend to conduct an extensive survey, nevertheless the study shall be restricted under Esco Supermarket, Warri, Delta State.

Moreover, in carrying out the research, certain category of people which include accountants, managers, and sales representative in these selected few are best suited for this research.

Limitation of the Study

The limitations encounter in the course of this study includes:

Time constraint

Resources of the researcher disposal

Availability of relevant data of information

Existence of other limiting factors no readily envisaged.

Definition of Terms

Accounting: This is the process of recording classifying, selecting, measuring, interpreting and communicating financial data of an organisation to enable users make assessment and decision. T is a disciple which comprises a set theories and concept for processing financial data into information.

Book keeping: This is the actual systematic recording of daily transaction in the appropriate book called book keeping.

Profit: Profit is reward which becomes due to the owners of a business as a result of a successful period of trading.

Accounting Equation: This is a method of calculating for asset and liabilities of a business. The fundamental formula is

Asset – Liability = Capital

Asset: Asset can be defined as the properties of a business e.g van, equipment, inventory, cash etc.

Capital: This is the proprietor’s fund or net worth of business that is owner’s equity.

Liabilities: This is an amount owned by the enterprise to outsiders or customers.

Double Entry System of Accounting: It is a principle which stated that all transactions have two effect, the receiver of benefit and the giver of benefit.

Accountant: An accountant is a person who has undergone a formal or professional training in the process of accounting and also who belongs to at least one of the recognized professional body of accountants of Nigeria either the ICAN or ANAN.

Balance Sheet: Balance sheet is a statement that show the presentation of the summary of assets and liabilities in a well arranged form so that financial position may be clearly ascertained.

Organisation: Organisation can be defined as a system or coordinate activities by two or more participants in order to achieve common goal.

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