THE IMPACT OF ACCOUNTING RECORDS IN SMALL AND MEDIUM SCALE INDUSTRY.
Abstract
An expansive wisdom is bought by experience learning teaching more in one year then experience in twenty. Rogar Ascharm. Furthermore, it is impossible for a man to learn. On this note I state that a great number of people go suddenly and with force into business without having a sound knowledge of what business is all about what it takes to rim or manage a business. One cannot be said to have committed an offence nor made a mistake to ascertain them. It is a daily practice to set up small and medium scale firms in every nooks and ceramics of Nigeria, but sample though worthy questioning. How many actually stand with the test of time many business levers commenced business with huge sums of money (Capital) have experienced a mistiness running down of the business the predicament has been attributed to many factors. The study critically worked into the accounting systems and management problems in separation in both small and medium scale industries (a case study of Mr. Bigg’s and Uncle Joe’s bread) Enugu state I have found out if records actually existed, the problems encounter in keeping them and effects they have on the entire business organization. Questionnaires and personal interviews were used by the researcher in obtaining the necessary factors. The main findings at the end of this research reveals that improper accounting and poor management techniques played a vital role in the failure of most business firms. Based on the major findings the research made the following recommendation; Proper planning and control Use of good accounting techniques Application of sound credit policy, Sound wage and salary policy,Improved inventory management, Reduction of operating cost experience, -Striving to improve sales.
CHAPTER ONE
Introduction
Background of the Study
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 I s 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.
Nit is however remarkable to note that inspit of this high hope, little success has been achieved in Nigeria.
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 nop 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 “ the impact of Accounting Records in Small and Medium Enterprises in Enugu State. A case of study of Uncle Joe’s Bakery and Mr. Bigg’s is 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 (ie maximizing profit and minimizing loss).
Statement of Problem
It is new 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 where as 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 a head. 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 Enugu State Mr. Bigg’s and Uncle Joe’s Bakery, 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 mgt 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.
Research Questions
The following research question shall guide the study;
1) What are the major roles of Accounting Records in the development of medium and small scale industries
2) What are the major impacts of Accounting Records in small and medium scale industries.
3) What are the problems confronting small and medium scale industries in keeping proper accounting records.
4) What are the strategies for improving the keeping of Accounting records for productivity and business success in medium &small scale Indus.
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.
This study capital the impact of accounting record in small and medium scale enterprises in
Enugu State “a case study of Mr. Bigg’s and Uncle Joe’s Bakery” 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 stuidy to only the impact of accounting records in small and medium size industries Mr. Bigg’s and Uncl e Joe’s Bakery.
Methodology
Generally, Enugu State is designed as a city dominated by evil servants compared with place like Aba, Onitoha, Nnewi which are termed commercial towns or industrial cities. Based on this limitation, the study was only executed on bakery industries and few selected small and medium scale establishment. A field study using questionnaires and schedules of interview on the accounting system and the organization pattern in SMEs was chosen. This will help to fulfill the aims and objective of the study vis –a-vis finding out the types of exists and the problems maintained by SMEs of any exists and the problems they face of keeping such records.
There was pretest of the questionnaires among the business owners. Another pretest was carried out on the employers in the employment of Mr. Bigg’s and Uncle Joe’s Bakery and other employees in similar industries in Enugu metropolis who exhibited a clear understanding of the questionnaires. The question curtained in the questionnaire. Acted as a basic guide for the interviews with the owners of these firms and some cases the accounting officers.
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”