The Effect of Poor Accounting Records in Small and Medium Profit Making Organization a Case Study of Asa Ventures Ltd, Ozoro, Isoko North LGA
CHAPTER ONE
Objective of the Study
The major of this study is to examine and be able to identify the possible effect that a poor accounting record will have in a profit making organization.
The study will specifically;
- Find out the effect of poor accounting records
- Identify the causes of poor accounting records
- Make the researcher judge and identify the level of effects on the business
CHAPTER TWO
REVIEW OF RELATED LITERATURE
What are the small scale enterprises
Small scale enterprises has been defined variously by many individuals and institution using various yardsticks such as numbers of employees, volume of sales, value of assets, or the volume of deposit in banks (Ademola et al 2012). The National Economic Reconstruction Fund (NERF) defined small and medium enterprises with a criterion that projects to be financed by the firm should have a total fixed asset cost (including land) of not more than N10million. The Federal Ministry of Industry (in respect of the small scale industries credit scheme) sees small scale industry as any manufacturing, processing or service industry with capital investment not exceeding N150,000 in machinery and equipment alone. According to Atijosan (1998), a small business is any manufacturing, processing or servicing industry that satisfies any or all of the following conditions:
- Capital, but excluding cost of land and not excluding N750,000
- Staff strength not exceeding 50 persons and wholly Nigerian owned
- A manufacturing, processing or servicing industry, exceeding the units of investment stated is relatively small compared to prevalent size of plant and the technology is fairly labour intensive.
According to Ademola et al (2012),Small scale enterprises are catalysts for catalysts for world’s economic growth and development which have dominated the industrial sector of both developed and underdeveloped countries. Aruwa (2006) believed that Nigeria’s industrial sector is dominated by small and medium scale enterprises (SMEs) which accounts for 90% in terms of number of enterprises, as compared with other developed countries where more than 98% of all their enterprises belong to SME sector, about 80% of the total industrial labour force in Japan is SME, 50% in Germany, 46% in USA are employed in smaller firms. Central Bank of Nigeria defined small scale enterprises as all businesses with a total assets investment of less than one million, an annual turnover of less than one million and with a total number of employees of less than fifty (World Bank Mapping 2001). In addition, the International Finance Corporation (IFC) and Corporate Affairs Commission in 2001 further justified that Nigeria’s industrial sector is dominated by SMEs, estimated to be about 90% of the sector employing less than 50% of the people (HPACI 2002). Given the place occupied by the SMEs in Nigeria’s industrial sector, it is expected that the success of the Nigerian economy would be partly dependent on the success of the SMEs. Nwoye (1991) pointed out clearly that SMEs are catalysts for Nigeria’s economic growth and development. He believe that through so many SMEs, Nigeria has great potentials for success and growth, sales of large volume of goods etc. Even though, some of them have adequate capital, many of them fail due to poor financial management operations.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine the Effect Of Poor Accounting Records in Small And Medium Profit Making Organization. Isoko North L.G.A. Asa Ventures Ltd, Ozoro, Isoko North L.G.A form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the Effect Of Poor Accounting Records In Small And Medium Profit Making Organization A Case Study Of Asa Ventures Ltd, Ozoro, Isoko North L.G.A. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of the effect of Poor Accounting Records in Small and Medium Profit Making Organization
Summary
This study was on the effect of poor accounting records In Small And Medium Profit Making Organization. Three objectives were raised which included: Find out the effect of poor accounting records, Identify the causes of poor accounting records and Make the researcher judge and identify the level of effects on the business. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from selected Asa Ventures Ltd, Ozoro, Isoko North L.G.A. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Findings revealed that majority of the respondents did kept business accounting records. Records are kept on cash basis. Sales purchases, creditors and debtors. Receipts , invoices, payment vouchers are used as record keeping documents which help to reduce operating costs, improves efficiency and productivity. Accounting records are very essential for decision making and majority of the respondents do not prepare yearly financial statements. Findings also revealed that majority of the small scale business operators measure performance of their businesses. Profitability is widely used as a measure of financial performance; workers provide a strongest linkage to successful business performance. Majority of the small scale business operators do not set yearly objectives for each performance indicator and majority do not prepare budgets for performance appraisal.
Recommendation
Small scale business operator units should ensure that complete and accurate business records are kept because they are essential for decision making. This can be ensured by undertaking course training about records keeping, and hiring knowledgeable and skilled workers.
There is need for the owners and managers of the small scale enterprises to embrace proper accounting records keeping practices in order to be successful in their financial performance
References
- Ademola, G. O., Samuel O. J.& Ifedolapo O. (2012),The Roles of Record Keeping In the Survival and Growth of Small Scale Enterprises in Ijumu Local Government Area of Kogi State. Global Journal of Management and Business Research Volume 12 Issue 13 Version 1.0 Year 2012
- Anyigbo C. I. (1999). Cost and Managerial Accounting Decision Emphasis. Enugu: Itugo2 Publication Limited.
- Aruwa, S. A. (2005); The Business Entrepreneur, Academy Publication, Kaduna, Nigeria.
- Atijosan, Y. (1998) The Ecology of Small Business: Implications for marketing management in Management in Nigeria Vol.34 No. 1 Jan – March 1998.
- Bamberger, J. (1983). Value Systems Strategies and Performance of Small and Medium Sized Firms. International Business Journal Vol. No1, Issue 4.
- Barutcugil, I. (2002). Performance Analysis of Partial Flexible Manufacturing Systems. Global Journal of Flexible Systems Management 6 (1) 9-19.
- Barbara, R. (2010). Record Management, Change Management, Service Systems. Management Journal Vol 20. No 1, 2010. pp 124-137.
- Bearman, D. (1994). Electronic Evidence Strategy for Managing Records in Contemporary Organizations (Pittsburgh, Archives and Museum informatics)
- Burns, J., Ezzamel, M., and Scapens, R. (1999). Management Accounting Change in the UK. Management Accounting 1999, 77 (3) page 28-30. International Journal of trade, Economics and finance, Vol.1.No.1 June 2010.
- Bititei, U.S., Suwignjo, P. and Came, A.S. (2001). Strategy Management Through Quantitative Modeling of Performance Measurement Systems. International Journal of production Economics 69, 15-22.
