1.1 Background of the study
Currently, most organizations continue to increase spending on information system and their budgets continue to rise. However, economic conditions and competition create pressures about costs of information.
The main goal or objective of any business organization as stated by Lucey (1993) is to make and maximize profit while other objectives include going concern, growth, corporate social responsibility, benefits to employees and so on. Although other objectives are also considered very important as listed above, but profit maximization is usually consider first because it maximizes the shareholders wealth which is the ultimate aim of investing in a business (Oyerogba, Olaleye & Solomon, 2014). But, it is however saddens to observe that the profitability objective of many companies has suffered a setback in recent time. This setback in the profitability of companies was characterized to the aftermath of the global economic downtown of 2008 which has lingered up to the present moment (Osisioma, 2010).
The utilization of accounting information system (AIS) effectiveness is extensive spread of information required by various users of the organization. It has an effect on the decision making and assists organization administrative co-ordination in the organization. It is thus founded that effective decision making is important to organizational performance thereby increasing profit. This basically describes the link in between the utilization of Accounting information system and organizational performance. Taking into consideration the Situation in Jordanian banking sector, current issue are the adaptable investment trend as well as the adopting of electronic technologies in the banking sector (Al-Majali, 2011)
It is good to mention that the use of information is not limited to a particular manager or a department, but all administrative levels need to use information, which increases the importance of management information systems in the organization. Accounting information is known as a system for collecting and recording, storing, and processing data to produce information for the decision makers (Romney & Steinbart, 2009).
Accounting information is an information provided by the accountants and accounting systems. The information are usually presented in financial statements such as the income statement and the statement of financial position of the firm. It also includes any financial ratios extracted from these financial statements. Accounting systems of a firms are responsible for analyzing and monitoring the financial situation of firms, preparation of documents that are necessary for tax purposes, providing information to support many other organizational functions such as production, marketing, human resource management, and strategic planning of the firm. Without such a systems, the companies will find it very difficult to determine performance, identify customer and supplier account balances and forecast future performance of the organization. The main purpose of an accounting information system is the collection and recording of data and information concerning an events that have an economic impact upon organizations and the maintenance, processing and communication of such information to internal and external stakeholders for proper decision making (Stefanou, 2006).
1.2 Statement of the problem
Generally, information system is developed using information technology to help an individual from performing their task. Therefore, most companies focuses on developing information system in order to support decision system, communication, knowledge management, as well as many others. The key part of this information system needed for decision making in companies is accounting information system.
Today, information technology and an increasingly transparent financial sectors have become key driving forces in business operations, strategies, structures, ownership and profit making. This forces cut across many industries to force changes that, in turn, have had significant economic and social impacts on the organizational effectiveness. Structurally, the emerging information technology industry is uncharacteristic of typical traditional process which has gradually gone out of the need to increase efficiency and cut on operations costs thereby increasing profit in companies. Therefore, the study seeks to examine the effects of accounting information system on profitability of a company.
1.3 Objective of the study
The main objectives of this study is to examine the effects of accounting information system on the profitability of the company.
The specific objectives are:
To examine the effect of accounting information system on profitabilityTo ascertain the effect of sales volume on profitabilityTo determine the effect of capital structure on profitabilityTo examine the effect of expenses on profitability
1.4 Research Questions
What are the effects of accounting information system on profitabilityWhat are the effects sales volume on profitabilityWhat are the effect of capital structure on profitabilityWhat are the effects of expenses on profitability
1.5 Research Hypothesis
H0: There is no relationship between Total accounting information system sub-variables and profitability.
H1: There is relationship between Total accounting information system sub-variables and profitability.