REVIEW OF RELATED LITERATURE
The review will comprise experts to the study selected by the researcher. This study will help to provide a frame work within which to discuss the findings of this study. The historical development on the society, generally accounting and management will be reviewed.
According to Pett (2012) management want to be sure that the accounting data and information employs internal control system for the purpose of controlling and safeguarding the resource of the organization against waste, fraud, inefficiency and promoting accuracy and reliability of accounting information. Fensleim, Feingold, Gnupe (2011).
According to Bollouch, almond, Batty (2013) quantitative data are more useful in measuring economic activity and as such the concept of monetary lent is applicable to the accounting activities which in itself is economic activities.
This study will involve exploring the ways in which management understand financial statement.
2.2 The Meaning of Financial Statement
The meaning of financial statement cannot be properly examined without first of all saying briefly what accounting is all about as a course. Many writers have given numerous definitions of accounting some define accounting terms and economics data and qualification of economic events while other related accounting to a process.
Finny and Millers (2011:p.14) state accounting is an economic information specially designed to communicate. Significant of financial in order to permit informed judgment and decision by users.
It appears that any economic information should be regarded as accounting. In like manner, Bill (2012 p. 4) states that accounting is concerned with the qualification of economic events monetary terms in order to collect record, evaluate and communicate that results of the past events and to aid in decision making. It can therefore be said that accounting comprises all divers’ activities which function independently to provide of action for carrying a business.
According to Azubike (2005) state accounting as the process of preparing summarizing calculation accounting information as a report and present it to the managers and others users which will aid them in division making. Thus, financial statements are indispensable especially when entrepreneurs embark upon proposals concerning business establishment. From the foregoing, financial statement can be regarded as the output of an accounting process. These are the means through which selected information about an entity, economic activities can be communicated to the external users.
According to Azubike (2005) view financial statement as the means communicated to interested parties, the means a communicating to interested parties, the information on the resources obligation and performance of the reporting entity or enterprise.
Financial states are generally used to depict the financial status of a firm. These statements provide the raw material for financial analysis and they must be fully understood before ay meaningful analysis can be undertaken.
2.3 Types of Financial Statement
In many organizations, statement is restricted to only three types, namely
(a) Statement of financial position
(b) Income statement (profit or loss statement)
(c) Sources and application of funds
Schatteker Bean (2009:p. 119) state that basically financial statement is divided into parts namely the historical statement which cover the report on past performance and the performance statement which focuses on the expected future performance.
Both kinds of statement are essentially in the financial information system of business enterprises. But the about list is not exhaustive as provided in Section 334 (55) of the Company and Allied Matters Decree. The financial statements required under sub-section. Financial statements required under sub-section (1) of this section shall includes
(a) Statement of accounting policies
(b) The statement of financial position as at the last day of the year.
(c) A profit or loss account or in the case of a company not trading for profit, and income and expenditure account for the year.
(d) Notes on the accounts.
(e) The auditor’s reports
(f) A statement of the sources and application of funds
(g) A value added statement for the year
(h) A five year financial summary, and in the case of a holding company the group financial statement. The above statement will be analyzed as we progress.