ATTENTION:
BEFORE YOU READ THE CHAPTER ONE OF THE PROJECT TOPIC BELOW,
PLEASE READ THE INFORMATION BELOW.THANK YOU!
INFORMATION:
YOU CAN GET THE COMPLETE PROJECT OF THE TOPIC BELOW. THE FULL
PROJECT COSTS N5,000 ONLY. THE FULL INFORMATION ON HOW TO PAY AND GET THE
COMPLETE PROJECT IS AT THE BOTTOM OF THIS PAGE. OR YOU CAN CALL: 08068231953,
08168759420
THE EFFECT
OF ACCOUNTING TECHNIQUES ON SMALL BUSINESS PERFORMANCES
CHAPTER ONE
INTRODUCTION
1.1. BACKGROUND TO THE STUDY
The Small
and medium scale enterprises sector has
been recognized worldwide for its role in economic advancement through ways
various like; wealth generation, employment creation, and poverty reduction
(Kithae, Gakure, & Munyao, 2012). Small and medium scale enterprises are a
fundamental part of the economic fabric in most developing countries, and they
play a very important role in furthering growth, innovation and prosperity.
Although smaller in size, they are the most important enterprises in the economy
due to the fact that when all theindividual effects are aggregated, they
surpass that of the larger companies. The social and economic advantages of
small and medium scale enterprises cannot be overstated.
SMEs are defined as non- subsidiary, independent
firms which employ less than a given number of employees, this number varies
across national systems, other parameters other than the number of employees
are used in categorizing businesses as SMEs.
As per the
time of the new millennium SMES accounted for 95% of firms and 60-70% of
employment creation in majority countries in the world (OECD, 2000). Small and
Medium Scale Enterprises are mostly found in the service sector of various
economies which in most countries account for two-thirds of employment levels.Being
highly innovative, they lead to the utilization of our natural resources which
in turn translates to increasing the country’s wealth through higher
productivity. Small and medium scale enterprises have undoubtedly improved the
standard of living of so many people especially those in the rural areas
(Ariyo, 2005).
Accountingtechniques
serves as a critical tool for recording, analyzing, monitoring and evaluating
the financial condition of organizations,preparation of documents necessary for
tax purposes, providing information support to many otherorganizational
functions, (Amidu et al., 2011). In the context of SMEs, accounting techniques
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.
Many small
business owners are daunted by the mere idea of accounting techniques and
bookkeeping. But in reality, both are pretty simple. Keep in mind that
bookkeeping and accounting techniques shares two basic goals: to keep track of
income and expenses, which improves chances of making a profit, and to collect
the financial information necessary for filing various tax returns. There is no
requirement that records be kept in any particular way. As long as records
accurately reflect the business’s income and expenses, there is a requirement,
however, that some businesses use a certain techniques of crediting their
accounts: the cash method or accrual method. Depending on the size of the
business and amount of sales, one can create own ledgers and reports, or rely
on accounting (Williams et al 1999). Elements of financial position, including
property, money received, or money spent, are assigned to one of the primary
groups, that is, assets, liabilities, and equity. Within these primary groups
each distinctive asset, liability, income and expense is represented by
respective “account”. An account is simply a record of financial inflows and
outflows in relation to the respective asset, liability, income or expense.
Income and expense accounts are considered temporary accounts, since they
represent only the inflows and outflows absorbed in the financial-position
elements on completion of the time period.
Furthermore,
nurturing of the small to medium size enterprises (SMEs) is being hailed for
their pivotal role in promoting grassroots economic growth and equitable
sustainable development, this nurturing has resulted in increased entrepreneur
activities in the SMEs sector in developing countries (OECD, 2000). SMEs play a
key role in transition and developing countries These firms, constitute a major
source of employment and generate significant domestic and export earnings,
thus SME development emerges as a key instrument in poverty reduction efforts
and their advancement is key to sustained economic growth, for they are an
integral part of a country’s economic fabric and their success affects the well
being of the society as engines of job creation, economic growth and
innovation.
However, the
mortality rate of these small firms is very high. According to the Small and
Medium Scale Enterprises Development Agency of Nigeria (SMEDAN) Nigeria, 80% of
SMEs die before their 5th anniversary, another smaller percentage goes into
extinction between the sixth and tenth year thus only about five to ten percent
of young SMEs survive, thrive and grow to maturity. This implies that, the
survival rate of SMEs in Nigeria is less than 5% in the first five years of
existence. This also suggests that, SMEs in Nigeria have not been able to
contribute to development. Among the factors responsible for these untimely
close-ups are poor accountingtechniques,lack of concrete record keeping,
inadequate accounting information and procedures,lack of finance, weak institutional
capacity, lack of managerial skills and training of small-scale enterprises,and
tax related issues.
Against the
backdrop, maintenance of proper accounting records and techniques is a
pre-requisite for the success of every business or enterprise, this involves
documenting all transactions of business entities includes assets, liabilities
and capital (liquidity). In other to solve limitations such as lack of finance,
weak institutional capacity, lack of managerial skills and training of small-scale
enterprises, there is need for relevant business and management expertise to
manage properly the finance, purchasing, selling, production, and human
resources aspect of the business. According to Jones (2012), accounting is
important in that, it allow businesses or organizations to understand their
financial perspective, and moreso,in order to develop the small business
enterprises properly; there is the need for them to adopt proper accounting
techniques.
SMEs are
also require adequate and also sophisticated accounting techniques and systems
to better manage scarce resources and enhance customer and owner/manager
values, assist them in controlling costs, measuring and improving productivity
and thus ensure the achievement of the business goals.
1.2. STATEMENT OF THE PROBLEM
Most of the
existing research literature on accounting in Nigeria SMEs tends to be more
biased toward the use of financial accounting techniques and methods by small
business onwers, information technology adoption as well as research in credit
accessibility for SMEs, more so only remote exists in regard of the adoption of
modern accounting techniques by SMEs in Nigeria.
Nandan
(2010) argued that like larger firms SMEs also require adequate and
sophisticated accounting techniques and systems to better manage scare
resources and enhance the firm’s values. Although SMEs may have some
constraints in utilizing fully accounting techniques/practices due to their
relatively small size and limited resources, like larger firms SMEs face
similar forms of complexities, uncertainties and are more prone to failures.
A number of
Small Scale Enterprises have not given much attention to accounting techniques
in relation to their business transaction, despite its importance in the
success of businesses. This could be lack of sound knowledge in accounting
practices by owners or respective managers. Also, there was difficulty in
ascertaining whether comprehensive accounting methods that satisfied the laws
under which it was incorporation had been kept. It was hard to determine to
what extent no adherence to laid – down accounting procedure and constituted in
the wheel of implementation of good accounting system. Difficult exist in
ascertaining how far non – recognition of the necessity of accounting
techniques to continued existence and growth of this small scale business, low
educational background of owners and the employment of unskilled accounting
staff had affected the production of unreliable accounting or financial
statement.
In addition,
the pace of adoption of modern accounting techniques has been slow by many
organizations, mostly Small business enterprises; this has led to the
diminishing relevance of major accounting techniques and methods as a vital aid
to managerial decision-making. This gap is commonly referred to as „relevance
lost” where organisation’s accountants have not entirely abandoned concepts of
conventional management accounting despite advancements in the business
environment, thereby leading to lack of managerial accounting skills for
decision making and lack of technical skills are as much obstacles to
developing a small business as is the inability to access credit, which in turn
diminish the rate of performances for mostly growing Small and medium scale
business enterprises.
According to
Goltz (2011), poor accounting techniques are one of the top ten reasons why
small-scale businesses fail. i.e. you cannot be in control of a business if you
do not know what is going on. With bad numbers, or no numbers, a firm’s is
flying blind, and it happens all of the time, this affect the operations and
performance of SMEs in Nigeria especially this issue of lack of adoption of
good accounting techniques/method which is a worm eating deeply and the large
chunk of revenues generated by these SMEs for their growth and survival. These
have led to increase in record of dearth of Small and Medium Scale Enterprise
(SMEs).
1.3. OBJECTIVES OF THE STUDY
The major
objective aim is to examine the effect of accounting techniques on small scale
business performance.
Other
specific objectives aimed to be achieved are:
1. Evaluate
the knowledge levels of accounting techniques among small business owners and
how this affects enterpriseperformances.
Investigate
the influence of accounting techniques on SMEs performance.
Determine
the influence of accounting techniques and practices on financial
decision-making by Managers/ operators of SMEs.
Determinethe
factors hindering and/or enhancing accounting techniques/practices in small
business enterprises.
Examine the
relationship between Accounting Techniques and SMEs operations and survival.
evaluate
challenges of accounting techniques among small business owners
Suggest
possible solution to the challenges confronted by various small scale business
1.4.
RESEARCH QUESTION
The research
question provides a framework and guidelines through which substantial
knowledge of the research study can be understood.
The research
question asked includes:
Knowledge
levels of accounting techniques among small business owners and how this
affects enterprise performances?
The
influence of accounting techniques on SMEs performance?
Influence of
accounting techniques and practices on financial decision-making by Managers/
operators of SMEs?
The factors
hindering and/or enhancing accounting techniques/practices in small business
enterprises?
The
relationship between Accounting Techniques and SMEs operations and survival?
Challenges
of accounting techniques among small business owners?
1.5.
STATEMENT OF HYPOTHESIS
The
following research hypotheses were developed in order to properly address the
problems of the study. The hypotheses are stated in the null form for testing:
HYPOTHESIS
ONE
Ho1:
Accounting Techniques has no significant influence on SMEs performance
HYPOTHESIS
TWO
There is no
significant relationship accounting techniques and SMEs’ operation/survival.
1.6.
SIGNIFICANCE OF THE STUDY
Though, this
study was initiated to evaluate the importance of accounting techniques in
small and medium scale business, no gain saying that, accounting techniques
plays a positive role in the integrity of the decisions as well asthe success
of the small scale business.
The
significance of this study was to create through documentation, an awareness of
the importance of accounting techniques and basic accounting procedures to
small-scale enterprises.
It will
therefore equally be of immense help to the Small and Medium Scale Enterprises
Development Agency of Nigeria (SMEDAN), in evaluating the success of its
activities with specific reference to the problem of poor accounting techniques
initialization and basic accounting procedures in such industries. It would
also assist the Agency in determining or formulating their future plans.
In addition
it will be a source of knowledge to small-scale enterprises (SSE) on how to
maintain proper accounting records and standards. The result will greatly
facilitate the work of the Internal Revenue Services and the Value Added Tax
officials in developing strategies to extend the tax net to cover such
enterprises which form significant proportion of the Nigerian business
community.
Finally, It
will also be of use to the student, researchers for further research study, the
existing and prospective entrepreneur as well as any interested party. It will
assist students in their knowledge build-up and appreciation of the practical
accounting situation of the small scale business.
1.7. SCOPE
OF THE STUDY
The research
work has focused on SMEs because these firms in Nigeria account for more than
90% of the country’s business (Central Companies Directory, 2010). Many studies
have been conducted on small-scale enterprise such as accounting methods and
small scale productivity, but none of them has looked at the accounting
techniques on small scale business. It is for this reason that our study seek
to look into the effectof accounting techniques on small business enterprises
performances in Osun Metropolis.
The activities of the regulating body Small
and Medium Scale Enterprises Development Agency of Nigeria (SMEDAN), were also
put into consideration. However, the research was limited to small and medium
scale enterprises operator in osun metropolis due the schedule of the
researcher.
1.8.
LIMITATIONS OF THE STUDY
As with all
studies, limitations exist and must be acknowledged. Moreover, the outcomes
were based on the information solicited from the respondents and such might be
subjected to human errors, omissions and possible mis-statements.
The
limitations of the study are as given below:
a) First of all time did not allow the
researcher to glean information from all the Small scale business enterprise
and all institutions under SMEDAN
b) The study could not show the whole
scenario of the all small scale business in Nigeria.
c) Because the sample is chosen from the one
state Of Nigeria. That’s why the findings and analysis is varying slightly in
organization to organization.
d) The questionnaire was not understood by
some respondent.
e) Some respondent did not give enough
concentration to understand the significant of analysis.
f) The time was not enough to collect the
data from the respondent.
1.9. DEFINITION OF TERMS
1. Accountant: An accountant is any person
who possesses a professional license to practice accountancy from a recognized
professional body and has legal capacity and authority to carryout the duties
of accountants in taxation and audit practice.
2. SMALL SCALE BUSINESS
It is
defined as any business undertaken, owned, managed and controlled by not more
than two entrepreneurs, has no more than twenty employees, has no definite
organizational structure (i.e all employees report to the owners) and has
relatively small shares of its market.
Management
accounting
Management
accounting or managerial accounting is concerned with the provisions and use of
accounting information to managers within organizations, to provide them with
the basis to make informed business decisions that will allow them to be better
equipped in their management and control functions.
Balance
Sheet (Statement of Financial Position) :A snapshot of the financial status or
position of an organization at a point in time.
Accrual
Basis: A process of accounting that recognizes the impact of transactions on
the financial statements in the time periods when revenues and expenses occur
instead of when the company pays or receives cash.
Cash Basis:
A process of accounting where revenue and expense recognition occur when the
company receives and pays out cash.
7. Accounting: Accounting is defined as the
process of identifying, measuring and communicating economic information to
permit informed judgments and decisions by the users of the information.
Financial
Measures of performance: financial measures of performance can be referred to
as the results of a company’s operations in monetary terms. Financial measures
of performance are derived from the accounts of a company or can be found in
the company’s profit and loss statement or the balance sheet.
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following instructions and information if you
will like to order/buy our complete written material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount (#5,000) into our bank Account
below, send the following information to
(1) Your project topics
(2) Email Address
(3) Payment Name
(4) Teller Number
We will send your material(s) after we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
FOR MORE INFORMATION, CALL:
08068231953 or 08168759420
AFFILIATE LINKS:
myeasyproject.com.ng
easyprojectmaterials.com
easyprojectmaterials.net.ng
easyprojectsmaterials.net.ng
easyprojectsmaterial.net.ng
easyprojectmaterial.net.ng
projectmaterials.com.ng
googleprojectsng.blogspot.com
myprojectsng.blogspot.com.ng
https://projectmaterialsng.blogspot.com.ng/
Comments
Post a Comment