The relevance of accounting records and survival of business enterprises

Project Abstract

The relevance of accounting records to the survival of business enterprises cannot be overstated. Accounting records provide a detailed and accurate reflection of a company's financial health, performance, and position. This information is crucial for decision-making, strategic planning, and ensuring the long-term success of the business. Effective accounting records help businesses track their income, expenses, assets, and liabilities, providing insights into their financial stability and profitability. By maintaining accurate accounting records, businesses can monitor their cash flow, identify areas of improvement, and make informed financial decisions. Furthermore, accounting records play a vital role in fulfilling regulatory requirements and facilitating compliance with tax laws. Properly maintained records ensure transparency and accountability, helping businesses build trust with stakeholders, investors, and regulatory authorities. In addition, accounting records serve as a historical reference for businesses, enabling them to analyze past performance, trends, and patterns. This historical data can be used to forecast future financial outcomes, set realistic goals, and develop effective strategies for growth and sustainability. Moreover, accounting records are essential for assessing the overall financial health of a business and determining its ability to weather economic uncertainties and challenges. By analyzing key financial ratios, trends, and indicators, businesses can proactively identify potential risks and take corrective actions to mitigate them. Overall, the relevance of accounting records to the survival of business enterprises lies in their ability to provide accurate, reliable, and timely financial information that guides decision-making, ensures compliance, and fosters long-term success. Businesses that prioritize the maintenance of proper accounting records are better equipped to navigate the complexities of the business environment, adapt to changing market conditions, and achieve their strategic objectives. In conclusion, accounting records are indispensable tools for business management and are critical for the survival and growth of enterprises. By investing in robust accounting systems, processes, and practices, businesses can enhance their financial performance, mitigate risks, and position themselves for sustainable success in the competitive marketplace.

Project Overview

<p> </p><div><p>INTRODUCTION/BACKGROUND OF THE STUDY</p><p>The concept of capitalism remains the most important reason why people go into business. (Onula 1995,21). It is a propelling factor behind business survival and growth.</p><p>Thus profit when attained must be improved upon. Many variables have been noted to significantly contribute to the improvement of profit performance these include:</p><p>Efficiency in management, good accounting system, availability of capital, good government policy etc (Nwachukwu:1990, 21). Based on the above factors, efficiency, effective management together with a sound accounting system is noted to be responsible for improvement in profitabilities of insurance companies ALNATER (1990).</p><p>Accordingly, digital system is undergoing vast changes to meet with the demands of the changing environment and is also for the btter (NEIGS 1981:201). Noticeable of such changes is the development and introduction of computers.</p><p>This tool is found to be useful in all spheres of human endeavours. It is agreed that computer is highly useful in the accounting information system. For example, it makes for easy data-recording, manipulation, classification, and interpretation. It facilitates effective decision making on a timely basis. (NSIWONGER 1989:211).</p><p></p><p>The introduction and application of computer in business management is a welcome development.</p><p>Therefore, the study is very relevant given the circumstances that profit remains the major reason why people go into business and the computer being identified as means. Computer remains the latest invention for effective accounting information system, and it is the basic tool for profit improvement. The study is relevant in such away that it also aimed at ascertaining the relevance of computer as an accounting tool. Therefore computer can improve the profit performance of insurance companies.</p><p>The national insurance company of Nigeria (NICON) is the main focus here.</p><p>NICON was incorporated on first July 1969 by degree 22 of 1969, to transact the business of Nigeria with the objective of assisting in the development of industry.</p><p>The company operates from about 60 locations in Nigeria. The head office is located in a suitable area along Muhammed Buhari way Garki Abuja. The former head office was in Lagos. It has 48 branches across the country. It has also a London contact office in the United Kingdom (UK).</p><p>The company is 100% owned by the federal Government &nbsp; of Nigeria. The federal ministry of finance incorporated (MOFI) is the supervising ministry. The company writes 10 (ten) lines of ,insurance business, namely five moto, workman compensation, marine aviation. It also handles all risks as well as life and pension organization structure with pension business. The company has approved organizational structure with a manning level of 1.200 staff. The corporation adopted the executive management system of administration from the advert of commercialization in 1989. This includes the position of three executive direction who are headed by a managing director. All this four executives are responsible to the Board of directors.</p><p>Technical and administration, departments were headed by general manager (GM). The company accounts for the 45% for the gross premium income of the insurance market and account for 42% of the total assets of the Nigeria insurance industry. It recorded a gross premium income of N1,729.7 billion and under writing and the computer being identified as means latest invention for effective accounting information system and now the basic tool for profit improvement. The study is relevant in such away that it also aimed at ascertaining the relevance of computer as an accounting tool. Therefore computer can improve the profit performance insurance companies. The National Insurance Company of Nigeria (NICON) is the main focus here. Result of N82million in 2000 income was N3.4billion with a profit after tax was N157million in 1995 a gross premium income of N871million.</p><p>As at year ended 31st December 2000, the corporation has recorded a gross premium income of N6.9million. The corporation also hit the billion mark as its share capital basic was raised to N1billion.</p><p>The first stage of the company divertive plan is to sell 51% to the strategic/core investor and later dispose the remaining 49% by the public offer.</p><p>NICON was incorporated on first July 1969 by degree 22 of 1969 to transact the business of Nigeria with the objective of assisting in the development of industry specifically if the company is to insure that federal Government assets are properly and fully protected by way of insurance</p><p></p></div><div><p>1.2 &nbsp; &nbsp; <strong>STATEMENT OF THE PROBLEM</strong></p><p>The problem Nigeria Insurance has a long history. The Nigeria insurance industry has of late been faced with decreased profitabilities.</p><p>Generally the market for insurance companies appeared to be saturated. Also insurance companies is compelled with the facts that there are back log of unsettled claims, fraud, embezzlement and poor decision making. Customers have lost confidence in insurance companies services.</p><p></p><p>The surviving and performing firms require extreme efficiency in their operations. The advert of the computer system has filled this gap.</p><p>The problem which this research project sought is to discover, whether there is any significant difference, in terms of profit maximization in insurance companies as a result of the introduction of computers.</p><p>1.3 &nbsp; &nbsp; <strong>OBJECTIVES OF THE STUDY</strong></p><p>This study is designed to achieve the following:</p><p>(1) &nbsp; &nbsp; To examine the impact of computerized accounting system on</p><p>profit ability and operational performance of NICON.</p><p>(2) &nbsp; &nbsp; To asses the benefits and usefulness of internal auditing system</p><p>to national insurance companies.</p><p>(3) &nbsp; &nbsp; To find out if checks and balances has contributed to the profitability of insurance company</p><p>(4) &nbsp; &nbsp; To compare manual computerized accounting system in terms</p><p>of cost and efficiency.</p><p>1.4 &nbsp; &nbsp; <strong>RESEARCH QUESTIONS </strong></p><p>The problems of this study could be taken down to research questions that will guide the researchers in addressing it properly. These are:</p><p>(1) &nbsp; Has the profit margin of NICON improve with the introduction of computer in the corporation?</p><ul><li>Is the corporation operational performance and efficiency enhanced by the introduction of computer in its operation?</li><li>Has the introduction of computer led to accurate and timely production?</li><li>Ho: There is no significant relation between profitability and computerized accounting system.</li><li>There is no significant positive relationship between operational performance and introduction of computerized accounting system.<ul><li><strong>SIGNIFICANCE OF THE STUDY</strong></li></ul></li></ul><p>The need to computerized company accounting system will be seen in the light of the following:</p><p>(1) &nbsp; &nbsp; it will help to reduce unemployment and improve the</p><p></p><p>general welfare of the people. Provides dependable data to government for good planning.</p><p>(2) &nbsp; &nbsp; it will constitute and important document to insurance firm</p><p>that have not gone computerized and a possible improvement in their net earnings.</p><ul><li>It will form a good secondary material for researchers and students alike.</li></ul><p>(4) &nbsp; &nbsp; it will form researchers material for further research and</p><p>good academic material for both university and polytechnic students.</p><p>1.7 &nbsp; &nbsp; <strong>SCOPE AND LIMITATION OF THE STUDY</strong></p><p>The study is specially designed to cover insurance Corporation with specific emphasis on NICON insurance co-operation of Nigeria.</p><p>The personnel under consideration will be the accounting and managerial staff of the company. NICON is chosen here because of its wide range of operation in the first to apply computer in its operation.</p><p>The study is limited to NICON insurance corporation which is the &nbsp; &nbsp; sample study for generalization. It is further limited by time and finances.</p><p>1.8 &nbsp; &nbsp; <strong>ORGANIZATION OF THE STUDY</strong></p><p>The study is organized into five chapters. Chapter one contains the background of the study, statement o the problems, objectives of the study, research questions, research hypotheses, significance of the study, scope and limitation of the study, organization of the study, definitions of terms, historical background of the study.</p><p>Chapter two contains the review of related literature. Chapter three consists of research methodology. Chapter four and five is all about the presentation and analysis of discussion, conclusions and recommendation.</p><p>1.9 &nbsp; &nbsp; <strong>DEFINITION OF TERMS USED IN THE STUDY</strong></p><p>(a) &nbsp; &nbsp; <strong>COMPUTER ASSISTING AUDITING TECHNIQUES</strong></p><p>This is defined as the purpose of written computer programmes of other techniques such as packs where and auditor uses the computer to assist him in his evidence gathering activities.</p><p>(b) &nbsp; &nbsp; <strong>COMPUTER AUDIT PROGRAM: </strong>This is a defined as a programme which will examine the content of a client computer files (Akzeen, 1999:411).</p><p>(c) &nbsp; &nbsp; <strong>LANGUAGE:</strong>&nbsp;This is the coding system by a programmer which can be input when it occurs (Longe) 1998:424.</p><p>(d) &nbsp; &nbsp; <strong>ONLINE:</strong>&nbsp;This is a system whereby each transaction can be processed (Seminar paper. Akwa Ibom State training course 1998:6).</p><p><strong>SERVICE BUREAU:</strong>&nbsp;This can be defined as an organization offering data processing facilities to other (Walker J. Kenneran,1946:4).</p><p><strong>TEST PACKS:</strong>&nbsp;This is a sets of data used by auditor to text the operation a client computer programme (S trader et al 1941:3)</p><p><strong>ACCOUNTING:</strong>&nbsp;This is “the process of identifying, measuring and communication economic information to permit informal judgment and decision by users f the information 1996:2).</p><p><strong>ACCOUNTING INFORMATION:</strong>&nbsp;This refers to the data that are found in financial statement (A.A.A. 1966:5). Accounting as an information system consist of three elements, inputs processing of the inputs and the output.</p><p><strong>&nbsp;COMPUTER: </strong>Computer can be described as an electronic devices capable of solving problems by accepting and performing prescribed operations on the date and supplying the results of these operations all without intervention of human operator’s (Peter et al 1994:227).</p><p><strong>ACCOUNTING INFORMATION SYSTEM:</strong>&nbsp;In a set of human and capital resources within an organization, which is responsible for the preparation of financial information obtained from the collection and processing of transaction data” (Robert H.Chendid,1981:166).</p><p><strong>CHAPTER TWO</strong></p><p><strong>REVIEW OF RELATED LITERATURE</strong></p><p>2.1 &nbsp; &nbsp; <strong>INTRODUCTION</strong></p><p>In recent years, computer have been extensively used in processing accounting information, and in preparation of financial reports. In business the application of computers is wide and varied. Computers are used in stock control, payroll, accounting, credit control, banking services, etc.</p><p>The application of computers is inevitable in this age, the theoretical background for the study, this chapter was designed to review, opinions and ascertain of relevant authors and contributions in textbook, journal periodical and some sub-topics under consideration were: corporation goals concept of accounting information; application of computers in business, benefits of computer in insurance industry et</p></div> <br><p></p>