Relevance of Accounting Records in Small and Medium Scale Industry
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Chapter One of Relevance of Accounting Records in Small and Medium Scale Industry
BACKGROUND OF THE STUDY
An accounting system records, retains and reproduces financial information relating to financial transaction flows and financial position,a basic reality of modern economic life is the inter dependence of the business. There is no doubt whatever that the small scale and medium companies constitute the real fabric of a of nation’s economy. And to say that the present and future economic advancement of this our great country Nigeria lies in the growth of Small to Medium Scale enterprises (SME) is not an overstatement. This opinion was uphold during the economic conference in Lagos in 1989 at the instance of three bodies namely the Nigeria Institute of Social and Economic Research (NISER), the National Association of Small-Scale Industries (NASSI) and the Friedrich Albert Foundation. In other words, SMEs constitute a vital engine to economic growth and development.
However, the environment in which this sector operates in Nigeria is both challenging and rewarding. It is challenging because it is fraught with the changes of risk arising from having, in the first place to invest money in a business and the problems of managing it in the country’s recessed economy.
Nevertheless, there is smiling countenance of success, should the SMEs be given dynamic leadership and properly managed in the present economically recessive climate in the country and with the aid of the various package of incentives given by government (Federal State and Local) to this group of business. Past record of different countries that are regarded to be developed revealed that industrial revaluation had been the main cause for their economic survival. The financial capacity, the said developed countries has come mainly from bad rock for any meaningful industrial development and for the acquisition of this trial and technological power. There are slow growth in industrial development and lag in rural development. It is often suggested that small scale and medium enterprises (SME) would help promote rural development, as well as general urban employment.
There is no doubt that the survival of entrepreneur in the present Nigeria economy depend solely on his initiation drive including quick adaptation to the environment. The question of age of buy, buy, buy, sell, sell is now a thing of history in the country (Nigeria). Therefore, sole proprietor must appreciate the fact and advance to study the economy and develop interest in and any manufacturing or agricultural sector no matter how small or medium for the present and future survival of Nigeria
In order to sustain the growth and survival of the small scale industrial deemed it necessary to establish institutions that would provide the back-up extension.
Hence the establishment of industrial development centers (IDCS). They were established to give direct grass root support service including counseling on project identification and selection machinery, serving, conducting market studies and preparation of feasibility studies.
Hence this project titled “Relevance of Accounting Records in Small and Medium Industry in AkwaIbomState. A case of study of Oliver Twist, Uyois to demonstrate the importance of financial record keeping and good management of SMEs to ensure that every bit of Naira and kobo of the industry is used judiciously so that the aim and objectives of the business is achieved (i.e. maximizing profit and minimizing loss).
STATEMENT OF THE PROBLEM
It is now a common knowledge that the Nigeria economy presently and past years experienced drastic failure or setback as regard small and medium scale enterprises. There is no authentic or systematic information concerning the organization whereas the business owners or managers could embark on meaningful decisions. On the regard opinions or decision could not be taken based on the present facts and figures on the business financial stand. This position could result to non-growth of business and fall in the capital structure of the organization.This problems and others not mentioned here confronting the small and medium scale enterprises has attracted numerous sympathy. It is also on record that the number of survivors from this problem seen not to have gloomy days ahead. Very many people have apportioned the blame on improper or insufficient accounting record keeping or maintenance in conjunction with managerial problems. The aforementioned facts are not only known factors which may hinds the progress of any business. Accounting to management other variables include finance, state of economy, effective communication between managers and other employees experience and devotion to duty and of course satisfactory accounting system. For the purpose of this study, it is assumed that all the variables above listed exist in consonance with business.
OBJECTIVE OF THE STUDY
The study oblige that we search deeply into accounting record keeping system of small and medium scale enterprise (SMEs) in AkwaIbomState Oliver Twist,Uyo to find out the method of keeping records problems associated in doing so, and whether the system is enough for the business. Furthermore, the study will determine the study the scope of which poor management has brought a set back to the progress and expansion of the organization. The study will also emphasis reason why SMEs should keep sufficient records and want to be involved greatly in the country’s industrial change. The study also will intend to marshal out a simple be effective system of accounting for both small and medium scale industries. Based on the result gotten from the study appropriate recommendations will be made regarding proper books of accounts necessary to be kept by SMEs for the purpose of profit maximization, management adequacy including high growth.
The following research questions was formulated by the researcher to guide the study;
1)Do small scale industries keep proper and accurate accounting record of their transactions?
2)Does accounting record keeping contribute to efficient performance of small scale business?
3)Does Manual account record keeping more useful and popular to small scale industries than electronic methods?
4) What are the problems confronting small and medium scale industries in keeping proper accounting records?
5)What are the major roles of Accounting Records in the development of medium and small scale industries?
SIGNIFICANCE OF THE STUDY
This study would benefit both businessmen and farmer because it will enable them to know that possible causes of industrial development and reasons for mortality of small and medium enterprises. This study will further did aid business owners and managers of SMEs by way of training good accounting records.
People who intends to invest their wealth in small scale or medium scale business should know the like hood of harm that will befall them for not keeping a proper and sufficient books and therefore should on their utmost interest guard against them.
Finally, it is considered that this study would be of importance to the planning authorities as it will avail them all the relevant information required in the formation of economic policies.
SCOPE AND LIMITATION OF THE STUDY
This study capital the impact of accounting record in small and medium scale enterprises inAkwaIbomState “a case study of Oliver Twist, Uyo” could have been extended to cover Enugu State as a whole and beyond and of problems of business establishment but considering the huge financial involvement, the project writer is compelled to limit the scope of study to only the relevance of accounting records in small and medium size industries Oliver Twist, Uyo.
The researcher encounters some constrain which limited the scope of the study;
Time:The time at the disposal of the researcher which was allocated for the study was a major limitation as the researcher had to combine other academic activities with the study.
Finance: The finance at the disposal of the researcher in the course of the study could not permit wider coverage as resources are very limited as the researcher has other academic bills to cover.
Availability of research material: The research materials available to the researcher at the time of this study were insufficient, thereby limiting the study.
DEFINITION OF TERMS
The following terms has been used in the study accounting: Accounting may be defined as a process by which data relating to the economic activities of an organization are recorded, measured and communicated to interest parties for analysis and interpretation.
Financial Accounting: This can be said to be the process of classifying and recording the actual transactions of an entity in monetary terms in accordance with established concept, principles, accounting standard and legal possible of the effect transactions over the period and at the year end.
Cost Accounting: This is said to be that part of management accounting which establishment budgets and standard costs and actual cost of operation department or product and the analysis of various, profitability or social use of funds. Testimonial
Cost: Nweze (2000) writing on “Quantitative approach to management accounting defined cost as a measurement in monetary terms of the amount of resources useful for some purpose”
ORGANIZATION OF THE STUDY
This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study. Chapter two highlight the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.
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