The effect of financial accounting reporting on managerial decision-making

 

Financial reports provides an overview of a business profitability and financial condition in both short and long term. They are necessary sources of accounting information about companies for wide variety of users. In. every business, there, needs information. This information needs ranges from financial, production, marketing etc. Generally, the larger  the  organization  the  greater  the  management  need  for information. Financial report plays a vital role in decision making process of business organizations. The main purpose of financial repots is the provision of financial information as a record making. It has been said that accounting is the language of business. It might also be said that the  ability  to  apply  accounting  knowledge  is  critical  to  success  in business: A business prepares various report at the end of each fiscal period.  This  report  summarizes  the  changes  that  have  taken  place during the period. For this financial report to be useful, the data be presented  in  such  a  way  that  the  user  will  recognize,  Similarities, differences and trends form one period to another to enable them make decisions. The accounting information contained in the financial reports enables management to make more inform decisions. Financial report

should provide adequate information in all areas of organization and economic activities; it should be able to disclose clearly the nature and accurate accounts of the transactions fun which the true and fair view financial  position  of  the  organization  can  be  ascertained.  Financial reports  serve  a  lot  of  useful  purpose  to  different  users  namely, shareholders,  Creditors,  Banks,  government  agents,  employees, potential investors and the management of the entity it self. The above identified groups of persons rely on the information supplied by the given firm through financial reporting in which they have interest to ascertain the organization?s state of affairs which serves as an important guide in deciding the extent to which they commit their fund. It is the “communication of financial information useful for decision making such as investment, credit and other business decisions” such communication include,  general.  Purpose  financial  statement,  balance  sheet,  equity report, cash flow reports and notes to these statements.