The study was about the effect of accounting record keeping and performance of small scale business in Nigeria The study design comprised of a combination of both descriptive and cross sectional research designs and both qualitative and quantitative data were employed. Stratified sampling was used to determine the sample size. A sample size of 136 computed by a formula for krejcie and Morgan 1970 was considered primary data was collected by the use of questionnaires which focused on the research questions. Secondary data was got from journal reports and internet which are in relation to the study objectives. Data entered into excel was presented by the use of frequency tables. Data analyzed by statistical packages for social scientists (SPSS) was presented in form of Pearson correlation coefficience table which showed the strength of relationship between accounting record keeping and performance of small scale business units. Findings on effectiveness of accounting record keeping in small scale business units showed that accounting record keeping enhances business decision making and adjustment accounting record play a role in reduction of operating costs, improves efficiency and productively.
Recommendation on the accounting record keeping in small scale business units, operators of small scale business units need to ensure that complete and accurate business records are kept to enhance business decision making and improve efficiency and productivity.
Record keeping refers to day-today maintenance of business transactions and accurate manipulating them to produce accurate and consistent financial statements (Parker, 2000). Record keeping is the process of keeping full, accurate, up to date business records (Reynolds Sarah, 2010). Proper record keeping can help business to effectively manage cash flows and stay abreast of profits and losses and develop plans for future based finance trends (N. Madison, 2002, Penn et al.,(1994), Jones (2003))
Record keeping cycle involves a process of that is followed by Accountants and book keeping staff in processing raw financial data into output information inform of financial statements (Mc Lean (1999) The process ranges from creation of business transactions, analyze and record the transactions in the journals by account name, post information from journals to ledgers, prepare a trial balance, journalize adjusting entries, post adjustments from the journal to the ledger, prepare an adjusted trial balance, journalize closing entries, post closing entries from the journal to the ledger, prepare a post closing trial balance, and prepare the financial statements (Jay. Jacquest and William .C. Miller, 2004) According to Hughes (2003), keeping records is crucial for the successful performance of a business. A comprehensive record keeping system makes it possible for entrepreneurs to develop accurate and timely financial reports that show the progress and current condition of the business. With the financial report you can generate from a good recordkeeping system, you can compare performance during one period of time (month, quarter or year) with another period, calculate trends and plan for the business’s future. An accurate record of the business’ financial performance is vehicle to monitor performance in specific areas, Complete and accurate income tax ,a basis for sound planning for the future and basis for discussion with partners, potential investors, and lenders, all these are important aspects which enhance performance of the business.
Flolick (2006), Macey(2001) defined Performance of business as the ability of business to meet the required standards, increased market share, improve facilities, ensuring returns on profitability, and total reduction and once this is achieved, a business is believed to be performing effectively.
Laitinen (2002), Barutcugil (2002) and Akal (1992), deﬁned business performance as a capability to produce the targeted output satisfying the needs of the interest groups.
Performance dimensions include; business competitiveness in terms of market share, sales growth, customer base, financial performance in terms of profitability, liquidity and capital structure, quality of services in terms of reliability and competence, flexibility in terms of speed of delivery and resource utilization in terms of productivity and efficiency (Atkinson, AA. (1998), Fitzgerald et al.,(1991), Neely et al.,(2002), keegan et al (1989), lynch and cross (1991) Small scale business is a business employing less than five employees but with a maximum of fifty employees, with the value of assets, excluding land, building and working capital of less than Uganda shillings 50 million naira and annual turnover of between 10 and 50 million (Izere Eppy, 2004). Small scale businesses usually have an investment of less than U& 50,000, have less than 10 employees and have annual turnover of between U & 5000-50,000 and do not file returns to the commissioner (Namaja’s report 1998). It is evident that good record keeping is important and geared to enhancing the business performance, survey shows that most small scale businesses are often strongly based on the owner-manager’s know-how and expertise this evidenced in the SMEs. A common assumption is that the owner-managers have sufficient technical knowledge but they lack managerial skills or sophisticated managerial practices (Maes et al., 2004). Rantanen (2001) argues that small ﬁrms are more likely to engage in informal management practices than to adopt sophisticated planning and control techniques. Nooteboom (1994) has recognized that in small businesses much of the operating knowledge is tacit, and it is connected to craftsmanship. According to Martinsuos and Karlberg (1998), small businesses have a limited capacity for marketing, strategy, acquisition of new knowledge and technology. External pressure from large companies with bigger budgets and provide products and services at lower cost. Running of business with little or absolutely no formal training in the area of management, hence poor or no records of transactions.
Majority of these firms collapse in the first five years of their operation and the smaller the size and age of the business, the more it is likely to collapse (K’ Obongo, 2000). According to the survey carried out by Enterprise Uganda (2007) one of the most prevalent challenges identified during the business health checks is that small scale business units are associated with poor accounting and financial records which makes entrepreneurs unable to make business decisions.
Small scale business performance is not readily predictable and some businesses have fallen out. The researcher in this particular study wishes to evaluate the relationship between record keeping and -performance of small scale businesses.
Most small scale business collapse with in the first five years of operation. According to the business health checks conducted by Enterprise Uganda, in 2003 there were 75% of small scale businesses registered and by june2007, 45% survived (Enterprise Nigeria internal report, 2007)
Although small scale business units have tried to increase their asset base to act as security to acquire loans for working capital, they still lack enough asset base and records to present to financial institutions to qualify for large loan acquisition.
Collapse of small scale business units in the first years could be attributed to improper or incomplete records which result into huge taxes levied on them and denying a chance to access loans and inappropriate decisions will be made
The purpose of the study was to find out the relation between accounting record keeping and performance of small scale business.
- To find out whether traders in keep accounting records
- To find out the performance level of small scale business in Nigeria.
- To establish the relationship between accounting record keeping and performance of small scale business.
- Do traders in keep accounting records?
- What is the performance level of small scale business in Nigeria?
- What is the relationship between accounting record keeping and performance of small scale business?
The researcher only looked on accounting record keeping and performance of small scale business.
- The results of the study will help the business community to improve on methods of record keeping for efficient and effective performance of their businesses.
- The study will help policy makers such as government agencies by provision of data about performance of small scale business units for tax purposes.
The study will help other scholars in further research into all aspects of management including record keeping
This material content is developed to serve as a GUIDE for students to conduct academic research
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