Financial Statement And Decision Making Process A Case Study Of Postbank Makueni Branch Makueni Town (Kenya)

TABLE OF CONTENTS

DECLARATION .................................................................................................................. i

APPROVAL ........................................................................................................................ ii

DEDICATION ................................................................................................................... iii

ACKNOWLEDGEMENTS ................................................................................................ iv

TABLE OF CONTENTS .................................................................................................... v

OPERATIONAL DEFINITION OF KEY WORDS .......................................................... ix

LIST OF TABLES ............................................................................................................... x

LIST OF FIGURES ............................................................................................................ xi

ABSTRACT .................................................................................................................... xiii

CHAPTER ONE .................................................................................................................. I

1.0 Introduction .................................................................................................................... I

1.1 Background to the study ................................................................................................. I

1.2 Statement of the Problem ............................................................................................... 2

1.3 Purpose of the Study ...................................................................................................... 2

1.4 Objectives of the study .................................................................................................. 3

1.5 Research Questions ........................................................................................................ 3

1.6 Scope of the Study ......................................................................................................... 3

1.6.1 Geographical scope ..................................................................................................... 3

1.6.2 Content scope .............................................................................................................. 3

1.6.3 Time scope .................................................................................................................. 3

1.7 Significance of study ..................................................................................................... 3

1.8 CONCEPTUAL FRAMEWORK ................................................................................. .4

V

CHAPTER TWO ............................................................................................................... 5

LITERATURE REVIEW .................................................................................................. 5

2.0 Introduction ................................................................................................................... 5

2.1 Theoretical Literature Review ....................................................................................... 5

2.2 Review of Related Literature ......................................................................................... 6

2.3 Financial statement ........................................................................................................ 7

2.3.1 Analysis of financial statements ................................................................................. 8

2.3 .2 Qualitative characteristics of financial statement ....................................................... 8

2.3.3 Objectives of Financial Statement ............................................................................ 10

2.3.4 Users of Financial Statement. ................................................................................... 11

2.4 Decision Making Process ............................................................................................ 12

2.4.1 Features of decision-making ..................................................................................... 12

2.4.2 Types of Decisions ................................................................................................... 13

2.4.3 The role of decision-making ..................................................................................... 15

2.4.4 Uses of financial statement in decision making ....................................................... 15

CHAPTER THREE ......................................................................................................... 17

RESEARCH METHODOLOGY .................................................................................... 17

3.0 Introduction ................................................................................................................. 17

3. l Research Design .......................................................................................................... 17

3.2. Study Population ........................................................................................................ 17

3.3. Sampling Techniques ................................................................................................. 17

3.4. Sample Size ................................................................................................................ 18

3.5. Data Collection instrnments ....................................................................................... 18

3 .5. I Questionnaires .......................................................................................................... 18

3.5.2 Interview ................................................................................................................... 18

VI

3.5.3. Documentations ....................................................................................................... 19

3.6 Limitation of the Study ................................................................................................ 19

CHAPTER FOUR ......................................................................................................... 20

PRESENTATION, INTERPRETATION AND ANALYSIS OF DATA ................. 20

4.0 Introduction ................................................................................................................. 20

4.1 Findings of the objective ............................................................................................. 20

4.1.1 Presentation of demographic data ............................................................................ 20

4.3 The use of financial statement in decision making ..................................................... 23

4.3.1 Financial reports available to management for decision making ............................. 25

4.4 The role of financial statement in decision making ..................................................... 25

4.4.1 Contents of accounting records ................................................................................ 26

4.4.2 Users of financial repoiis .......................................................................................... 28

4.5 limitations of financial statements in decision making ............................................... 29

4.5.1 Factors that hinders effectiveness use of financial statement in decision making ... 31

4.5.2 Maximum time that account records are kept .......................................................... 33

4.5.3 Period taken before a transaction is recorded in books ofaccounts ......................... 33

CHAPTER FIVE ........................................................................................................... 35

SUMMARY OF FINDINGS, CONCLUSION AND RECOMENDATIONS .......... 35

5.0 Introduction ................................................................................................................. 35

5.2 Summary of findings ................................................................................................... 35

5 .3 Conclusion ................................................................................................................... 3 5

5.4 Recommendation ......................................................................................................... 36

Appendix i ;references .................................................................................................. 38

a) Research Questionnaires ........................................................................................... 40

Vll

b) Interview Guide ......................................................................................................... 44

Appendix iii ;Research budget ..................................................................................... 45

Appendix iv;Gant chart showing schedule of activities ............................................. 46