1.1. BACKGROUND TO THE STUDY
Accounting information is a part and parcel of today’s life which is necessary to understand the accurate financial situation of the organization and used as the basis of making strategic decisions. Accounting plays a critical role in the success or failure of contemporary business institutions.
Accountinginformation serves as a critical tool for recording, analyzing, monitoring and evaluating the financial condition of companies,preparation of documents necessary for tax purposes, providing information support to many otherorganizational functions,(Amidu et al.,2011). In the context of SMEs, accounting information is important as itcan help the firms manage their short-term problems in critical areas like costing, expenditure and cashflow, byproviding information to support monitoring and control.
The range of accounting information users is a broad one, and it has different information needs, but the same quality requirements in terms of accounting information contained in the financial statements. Even if a number of criticisms and limitations can be brought and attributed to accounting information, it remains the most important substantiation source of financial decisions for most small and medium scale business.
According to Ademola et al (2012), accounting information is essential to business management. It involves identification, classification, storage and protection, receipt and transmission, retention and disposal of records for preparation of financial statements.