EFFECT OF IMPROPER ACCOUNTING SYSTEM: A CAUSE OF NON-PERFORMANCE IN INDUSTRIES
Any organization, manufacturing or non-manufacturing that knows its owns requires an effective accounting system for its continuous existence. We have in the post head of firms that folded up due to one reason or the other. When properly investigated as to what brought about its folding up, one may not be surprised that it was due to negligence in operating an affective accounting system.
Every manufacturing / non-manufacturing industry needs an effective proper accounting system to determine industry needs on effective proper accounting system to determine the profitability position at least to break even. The shoreholder is interested in seeing his invested funds, yielding returns. The creditors want to be sure that his money lent to the company is not squandered. Also the tax authority relies on this system to asses such company’s tax liabilities.
1.1 OBJECTIVE OF THE STUDY
The write-up tends to achieve the following objectives:
· To ascertain, assess and evaluate how improper accounting system affects the performance or industries.
· To examine the extent to which accounting system can supply management with much needed information for decision making.
· Finally, and most important objective, is to determine how improper accounting system could lead to non-performance in industries by examining the benefits of proper accounting system as a whole.
1.2 SIGNIFICANCE OF THE STUDY
With this study, players in the industrial sector or an economy will understand how keeping an improper accounting system could lead not only to the non-performance of such an industry but to the adverse effect of winding up of that industry.
The study will also be useful to management consultant, creditors, shareholders, tax authorities and even government. Also to the writer who aspires to become a prolessmal, the research work undertaking by him will enable him have a foresight of what is to come.
Finally, to any other student who might want to research in something similar, this work will be of useful importance.
1.3 RESEARCH QUESTIONS
In order to carry out a proper research of this nature, question must be answered. Such question includes:
· Does proper accounting system in an industry or organization affect its chances of making profit?
· Is proper accounting system necessary for effective operation hence the performance of an organization?
· Finally, what impact does a proper accounting system have on any organistion?
1.4 DEFINITION OF TERMS
FOLD UP /WIND UP: The closure of a firm due to mis-management of its fund or poor sales.
BREAK EVEN: This is also known as Break-even point. It is the poor at which total revenue equals the total expenses. At this point the firm make neither profit or loss.
SHAREHOLDER: These are owners of shares in a company.
FUND: A sum of money made available or saved for a particular purpose.
CREDITOR: A person / company to whom money is owned.
SYSTEM: A group of things working together as a whole.
TAX: This is a compulsory levy on incomes of individuals, companies and property charged by government.
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