The Usefulness Of Accounting Standards In The Preparation Of Financial Statements

Accounting Project Topics

Get the Complete Project Materials Now! ยป



The most common report from external use are the financial statement included in the annual report to shareholders (owners) and potential investors.  These financial statements are prepared to confirm with “generally accepted accounting principles” such “principles” have evolved over time or have been made acceptable by decree from official rule making body. Accounting principles result from an essentially political process.  The government through the Securities and Exchange Commission (SEC) prescribes the methods of accounting profession through its board, Nigeria Accounting Standards Boards also issue statements of accounting standards as guide for prepares of financial statements. In explanation of the above, the researcher examined the usefulness of the statement produced by the accounting profession’s organ (NASB) and how they are being complied with, its achievements and problems, hypothesis was also conducted. Chapter five, discussed the findings of the study.  It was discovered from the findings that accounting standards application in preparing financial statement have came to conclusion that it contributes numerously not to the company – Guinness (Nig) Plc, Enugu also on the nation’s economy as a whole.


Title page                                                                     ii

Approval page                                                               iii

Dedication                                                                    iv

Acknowledgement                                                         v

Abstract                                                                       vi

Table of content                                                            vii



1.1  Introduction

1.1      Background Of The Study                                        1

1.2 Statement Of The Problem                                         3

1.3      Purpose of the study                                               3

1.4      Statement of hypothesis                                          5

1.5      Research question                                                  7

1.6      Scope  of the study                                                 8

1.7      Significance of the study                                         9    

1.8      Definition of terms                                                  11



2.1  Review of related literature

2.2  Historical development of accounting standards          14

2.3      The making of standards                                                15  

2.4      Users of accounting standards                                         32

2.5      Application and compliance                                      34

2.6      Usefulness/benefits of standards                               36

2.7      International Financial reporting standards                 39


3.0 Research design and methodology

3.1      Research design                                                     42

3.2      Area of the study                                                    42

3.3      Population                                                             43

3.4      Sampling size                                                        43

3.5      Research Instrumentation                                        44

3.6      Validity of an instrument                                         45

3.7      Reliability of Instrument                                          45

3.8      Source of data                                                       46

3.9      Data analysis techniques                                         47



4.1  Presentation, analysis and interpretation of data

4.2      Presentation and analysis of data                              49

4.3      Interpretation of data                                              50

4.4      Test of hypothesis                                                  59



5.1     Findings, conclusion and recommendation

5.2      Findings                                                                70

5.3      Conclusion                                                            76

5.4      Limitation of the study                                            77  

5.5      Recommendation                                                    78


Appendices (questionnaires)





Guinness (Nig) Plc, is one of the biggest breweries in Nigeria today.  It is a quoted company in the Nigerian Stock Exchange Commission (SEC).  Guinness (Nig) Plc is an associated of Guinness overseas ltd, with headquarters at Dublin in England.

The journey of this company to Nigeria started in 1950 when the company was incorporated to import and distribute Guinness Stout from Dublin for sale in Nigeria.  In 1962, the stout brewery in Ikeja Lagos, was commissioned.  This station was the third of it kind in the world and the first outside the British Isles.  A second brewery in Nigeria was commissioned in Benin and from 1982 other breweries stations was commissioned including in other states.

The company share capital is made up of 60% ordinary share owned by Nigerians and 40% ordinary shares owned by Guinness overseas limited.  The Enugu Department which happens to be over study interest has a staff strength of about 10000 workers including both skilled and unskilled workers.

The accounts section of the brewery share of the total staff strength is about 200 workers.  The accounting department which is charged with the responsibility of providing management with relevant financial information that enable her (management) make decisions, also maintains and keep proper books of accounts which are summaries of the daily financial activities of the company.  Another major responsibility discovered within this accountant department is the preparation of the financial statements annually, which most be in compliance with the requirement of statements of Accounting Standards which external auditor must confirm and report on.





“Good accounting practice” means that the accounts must be prepared in compliance and in line with the Statements of Standards Accounting Practice (SSAP), International Accounting Standards (IAS), and Statement of Accounting Standard (SAS).

Thus, the burden of this investigation is to find “Good Accounting Practice” is being adhered to in the preparation of the financial statement and its benefits.  The researcher’s aims at achieving this by conducting special investigation on the requirements of the accounting standard and then relates it to the activities of preparing financial statement at Guinness (Nig) Plc.


The objective of accounting and financial statements is to provide reliable information about the economic resources and obligation of the business enterprises.  This information is important in order to evaluate the company’s strengths and weaknesses.  Its information indicates the various resource based available to export opportunities and make future progress.

In summary therefore, the account gives information about the economic resources and obligation of a business enterprises, which is needed to form a judgment about the ability of the business to survive, grow, adapt, and prosper a mid harsh economic conditions.

Another major purpose is that of providing information about the change in the net resources of the business organization, that is resources less obligations.

If these objectives of accounting are to be achieve then the financial statements must be understood by its readers or users.  This would only be possible if, they are prepared in accordance with the generally accepted accounting principles.  Those principles are derived from authoritative guidelines and standards.

Thus, the overall objective of research is to unveil the benefits or usefulness of the accounting standards in published financial statement oat Guinness (Nig) Plc.

Other objectives or purposes of the study includes:

a.            The effects of the standards on the Nigerian economy.

b.            To determine the extent of compliance of the financial statement in the accounting standards.

c.            The benefits or uses of the standards in other areas like students and lecturers.



Hypothesis according to O.K. Olakunori (1997) “is a statement which guides an investigation by providing a tentative solution to the research problems.  After the research problem has been stated, the next thing to do in the research process is to give focus on direction to its solution.

Also, Orji .J. (1996) said that hypothesis is a proposition put forward as a basis for reasoning a supposition formulated from providing data and presented as temporary explanation of occurrence as in science in order to establish a basis for future research. 

In order to analyse the usefulness of Accounting Standards in the preparation of financial statements of any firm, considering the validity and reliability of the information gathered the following hypothesis were formulated.                 

1.    H0:  Accounting standards have not played useful role in the

preparation of financial statement of the company.

HA:  Accounting standards have played useful role in the preparation of financial statement of the company.

2.    H0:  Accounting standards have no benefit in the Nigerian


HA:  Accounting standards have benefits in the Nigerian economy.

3.    H0:  Accounting standards does not aid the users of financial

statements to understand the financial statement to get better understanding of it.

HA:  Accounting standards aid the users of financial statements to understand the financial statement to get better understanding of it.


Get Full Work

Report copyright infringement or plagiarism

Be the First to Share On Social

1GB data
1GB data
1GB data
The Usefulness Of Accounting Standards In The Preparation Of Financial Statements