THE IMPACT OF

ACCOUNTING
RECORDS ON
PERFORMANCE OF
BUSINESS
ORGANISATIONS

Course: CIS101-Sec 7
Submitted to: MD ABU SAYED
Submitted by:
ID:
1
Structure of project:
CONTENTS PAGE

Abstract 3

Introduction 4

Literature Review 5

Research Questions 8

Methodology 13

Conclusion 19

References 20

Appendix 21

2
 ABSTRACT
The role of small and medium-sized enterprises (SMEs) in the economic development of countries/territories
around the world cannot be overemphasized. Beyond meeting the demand for the day-to-day goods and
services of the majority of the population of almost all countries/territories, SMEs make significant
contributions to global trade and economic development. Moreover, SMEs provide employment to the greater
share of the workforce of most countries/territories.

This survey empirically investigates the effect of accounting records keeping on Small scale
enterprises. In line with the objectives of this study, a descriptive design such as surveys and
questionnaires were employed as the major techniques for primary data collection.

Data collected were analyzed using both the qualitative and quantitative methods. The descriptive
statistics used were tables and percentages. The findings show that most of SMEs do not keep
accounting records. Some of the reasons as to why they do not keep accounting records were: time
consuming, lack of knowledge and skills, poor documentation, ignorance and poor support from the
workers responsible with records in the organizations.

Following the outcome of this study, it is therefore concluded that there is a strong positive
relationship between accounting records keeping and performance of small scale enterprises.
Accounting records keeping is essential for decision making which invariably affects performance of
small scale enterprises.

It is recommended that the owners and managers of the small scale enterprises should embrace
proper accounting records keeping practices for effective financial performance in their business.

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 INTRODUCTION

Small and medium scale enterprises are gaining wide spread acceptance as viable drivers of economic
growth. They have tremendous impact on employment generation. However, several of these
enterprises demise without fulfilling expectations due to poor management arising from weak
accounting structure. Many new business owners are daunted by the mere idea of bookkeeping and
accounting. But in reality, both are pretty simple. Keep in mind that bookkeeping and accounting
share 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
method 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.

Business benefit from availability of accounting information, equality important is the availability of
accounting that facilitates the solution or resolution of business planning, organization and control
function of the enterprises as a social organization. Most small scale firm owners prefer to recruit
unskilled personnel especially clerical and accounting staff. The product of these unskilled accounting
(clerical staff) has only succeeded in helping the small scale firms to stagnate; some firms have even
wound up. This was because unskilled accounting staff could not keep reliable accounting records
that would stand the test of time statutory; such staff could not correctly determined the profit or
loss of the firm preparing profit and loss account.

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 Literature Review

Introduction
This project aims at reviewing important literatures related to research topic. It consists of both
theoretical and empirical review. In theoretical review the researcher defines the concepts and terms
according to how different authors have defined them and empirical literature review provided the
different findings from different researcher who has done similar study.

Definitions of SME
Griffins and Elbert (2006) define SMEs as the one which is independently owned and managed, does
not dominated its market and this cannot be part of another business operator must be bosses
themselves, free to run their business as they are pleased.
The SMEs are defined as Micro, Small and Medium size. The government defines SME according to
sector employment enterprises in nonfarm activities including manufacturing, mining, commerce and
services. A micro –Enterprises the one with fewer than five employees, medium Enterprises with 50-
99 employees and large Enterprises with more than 100 employees, capital investment range from
less than BDT 5million to over BDT 800million. This definition would exclude a number of informal
sector enterprises, peasant farmers and locals engaged in lower level income generating activities.

The Nature of SMEs in Bangladesh

For purpose of better realization of this paper, it is significant to know how define SMEs are being
defined in Bangladesh. SMEs are currently usually defined in Bangladesh according to the definition
provided by the National Industry Policy in 2010, highlighted at Table 1:

Business size Criteria

Small enterprise Manufacturing: Fixed asset value* of BDT 5 million to BDT 100
million (USD 62,500 to USD 1.25 million) and 25 to 99 employees.

Medium enterprise
Service and trading: Fixed asset value* of BDT 0.5 million to BDT
10 million (USD 6,250 to USD 125,000) and 10 to 25 employees.
Manufacturing: Fixed asset value* of BDT 100 million to
BDT 300 million (USD 62,500 to USD 3.75 million) and
100 to 250 employees.

Service and trading: Fixed asset value* of BDT 10 million

to BDT 150 million (USD 125,000 to USD 1.875 million)
and 501 to 100 employees.
Note*: Fixed asset value has been considered by deducting the value of land and building. Therefore,
an SME can rent its premise or own which is not significant).
Source: Ministry of planning.
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Knowledge Gaps
Many researchers have studies about SMEs, focusing on different study problems such as;
management, accounting and financial needs and challenges, causes of small business failures. But
only a few have investigated the impact of accounting records on SMEs performance. They have
pointed out that, some SMEs produce accounting records based on computerized packages, relying
on accountants but often left bewildered by the complexity of information, accounting records hinder
application of appropriate measures in evaluating business success. Despite the findings, other
researchers did not mention some of the main issues like; how many SMEs really do keep accounting
records? How do SMEs keep the records? Do the public/private sectors influence on the use of
accounting records? Moreover, among the studies, few studies are done in Bangladesh. This study
tried to respond to this knowledge gap.

Relationships between Accounting Records and Performance

Performance of business refers to the ability of business to meet the required standards, increased
market share, improve facilities, ensuring returns on profitability, and International Journal of
Academic Research in Business and Social Sciences, January 2014, Vol. 4, No. 1 ISSN: 2222-6990 9
www.hrmars.com/journal total reduction and once this is achieved, a business is believed to be
performing effectively (Fitzgerald et al 2006). Performance refers to an ongoing process that involves
managing the criteria for which an institution, agency or project can be held accountable (Duranti and
Thibodeau, 2001). Typically, these criteria are represented as component parts of an internal system
and cover the institution’s ability to; control financial expenses, satisfy staff, deriver timely
interventions and respond to target group reactions to interventions. Fitzgerald et al 2006 argue
further that business enterprises must improve production if they are to effectively compete in this
era of rapid economic and technical change. Improved productivity requires both capital investment
as well as a work force that has the flexibility to acquire new skills for newly created jobs resulting
from structural changes in the economy. Bititei et al (2001) asserts that performance is a result of
workers because they provide the strongest linkage to strategic goals of the business enterprise,
Customer satisfaction and economic contribution that affects the business, hence it addresses the
mode in which an activity is accomplished in particular and the level of standards to which a task is
carried out within the working environment. According to Ikechukwu (1993), 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 generated from a good recordkeeping
system, performance during one period of time (month, quarter or year) with another period can be
compared. An accurate record of the business' financial performance is vehicle to monitor
performance in specific areas. Accounting records provide a basis for complete and accurate income
tax computation, 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. Business also depends on correct accounting records to make good decisions about the
firm. Decision such as expansion, drop or maintain decisions of product lines, make or buy decisions,
about size of debtors. Therefore if proper records are kept they will facilitate efficient, proper timely
decision making and enhance performance in small scale industry.

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Results of Similar Studies
The empirical review is centered on similar research conducted by other researchers on this same
subject. In a study conducted by Okoli (2011), he asserted that due to inability of SME owners not
keeping proper records they were not able to assess their performances effectively. Okoli (2011),
further argued that there is need for SME to keep proper records in order to enhance their
profitability and continuity. In a research conducted by Abayomi & Adegoke, (2016) in 2015, out of 94
respondents, 76 agreed that manual record is more useful and popular among SMEs than electronic
methods, while 18 agreed otherwise. A study conducted by Maseko and Manyani (2011) in Zimbabwe
on 100 SMEs revealed that SMEs do not keep complete records as a result of lack of knowledge in
accounting and the cost of engaging professional accountants. Mbroh and Atom (2011) in a study
conducted in Ghana reports that 59% do not put into use formal accounting at all due to low levels of
education, and insufficient knowledge in accounting.
In a research conducted by Williams (2010) on accounting information requirements of 928 SMEs
operating in Sydney, Melborne and Brisbane, it was discovered that 57% of the respondents used the
double entry book keeping systems. This finding did not agree with Peacock’s (2008) findings 2.1% of
types of records kept by enterprises, where only 2.1% of respondents were found to be using double
entry systems. In a study conducted by Bwana and Mwakujonga (2013) in Tanzania most respondents
were ignorant of the fact that financial information can be used to measure performance, growth,
financial position and usage for decision making. The respondents rather had the belief that the great
number revealed that the purpose of preparing accounting information is to meet requirement of
financiers revenue authorities and business registration. In a study conducted by Abdul Rahamon in
2013, only 19% of the respondents strongly agree that record keeping is important for decision
making and business adjustments, 41% agree while 11% were not sure, 21% disagree and 8% strongly
disagree. In a study conducted by Agbemva at all; (2016) at Ho municipality, Ghana 54.9% of
respondents maintained single entry book keeping while 45.1% adopted double entry book keeping
system of record keeping. Also, majority of the respondent revealed that preparation of financial
statements for their businesses have contributed greatly to the growth of their businesses. This
position is corroborated by the findings of Abdul Rahamon and Adejare (2014) who noted, that there
is a strong positive relationship between accounting records keeping and growth of SMEs.

7
Research Questions:

1. What is the impact of accounting records on SMEs performance?

2. What challenges SMEs face for proper keeping their accounting record?
3. To what extent do SME’s understand the accounting record keeping procedures and methods
to be used?
4. To what extent are the accounting records done successfully?
5. Do the public or private organizations influence SMEs on the use of accounting records?

Significance of the Study

To the Enterprises,
Improve management of the business. SMEs owners will know the importance of keeping records as
they will be able to maintain the transactions, daily stock taking made and find out whether there is
profit or loss. Know how to manage their finances, profits and losses, obtain knowledge on business
management.

To the University,
The study will show the University the importance of holding some seminars for entrepreneurs
educating the need to keep accounting records for their business transactions so they can have
proper management of all finances.
Also the University may put a special course on entrepreneurship concerning record keeping as
compulsory subject so the students may become competent entrepreneurs in the future.

Importance of Record Keeping and Business Performance

A good accounting system should give an accurate and comprehensive results of operations, which
allow quick comparison between current and previous data, offers the financial statements to be
used by prospective creditors, bankers, and management, facilitate filing reports and tax returns to
government regulatory agencies and tax collecting, and disclosing record keeping error, waste, theft,
and employee misconduct (Longenecker et. al). Ekwere asserted that the success of a business
depends to a reasonable extent on the accuracy of records keeping. According to Maseko &, Manyani
, accounting systems grant a basis of information to SMEs owners and managers operating in any
industry for the use in measurement of financial performance. Good record keeping enables business
firms to plan properly and also to curtail misappropriations of resources (Mwebesa et al), Muchira,
observed that keeping good financial records can positively influence management decisions of
business owners or managers. The most important information to an entrepreneur comes from the
accounting information. The accounting information is like the score card of an enterprise. They are
indicators of growth potentials, earning ability, liquidity and stability (Ibrahim). According to Nkwor &
Nkwor (2015), an efficient and effective record keeping is important to any organization, as it affords
a measurement and communication mechanism which can help in improving the quality of decisions
and actions which affect the way the scarce resources of an organization is put into use.

8
William et al, 2008 noted that the objective of record keeping includes:
 Provision of accurate picture of operating results
 To prepare actual records with budgeted figures
 To compare operating results of years of operations
 Preparation of financial position useful to owners of business, creditors, prospective
investors, bankers
 For filing of tax returns to various tax offices and usage by other government agencies.
 To reveal employees fraud, theft waste and errors.
 To preserve vital accounting records and destruction of obsolete records.
 To support loan applications to financial institutions.

Ademola et al.; 2012 also alluded to the benefits of record keeping as follows:
 It helps to prevent business failure
 Useful for sound financial planning and control
 Aids in decision making
 Critical to business survival and success
 Reveals the background picture which helps organizational change.

Record keeping shows the health status of a business (Waari et al., 2016). A publication by Australian
Government titled Record Keeping for Small Business in 2012 has reasons why small business should
keep records.
I. Record keeping helps entrepreneurs to fulfill their tax obligations.
ii. Record keeping helps entrepreneurs know how their business is performing
iii. Record keeping helps entrepreneur to have facts available for good business decisions.

According to Okoh & Uzoka,( 2012), the roles of accounting information on the improvement of the
performance of SMEs include:
 Usage as a control tool. It helps to detect fraud carried out by employees of an organization. It
helps in maintaining good accountability over the assets of a company like cash, stock of
goods, furniture and fittings and other movable assets of the company. Proper accounting
system should be set up in order to minimize opportunity for misappropriation and theft of
assets.
 It helps in credit transactions. Credit are being offered today by SMEs in order to stay afloat.
Improper record keeping can lead to loss of income, when credit transactions are not well
monitored.
 Helps in Taxation issues. There are various forms of taxes by government e.g. Pay as you earn
(PAYE), withholding taxes, value added tax et. al. Proper record keeping is germaine to
determine accurate taxes to be paid by a firm, thereby avoiding over taxation or under
payment of taxes as the case may be.
 Helps in profit determination. The primary motive of running a business is to make profit. It
may be difficult to find out whether a firm is making profit or not without adequate record
keeping.
 According to Akande (2016), the use of accounting information could be linked to the success
or failure of an Entrepreneur. According to Bowen (2009), there is a strong relationship

9
 between business performance and the level of training in the business management
especially in business finance record keeping. Knowledge and skills in book keeping is essential
as it impacts positively on the sustainability and growth of SMEs. Ogundana (2012) stated that
the concept of performance is used to determine the success of a business entity whether
small or big.
 The International Accounting Standard Board (IASB) conceptual framework specifies that
frequently, profit is used as a measure of performance. Business performance can be
measured in term of Business size, employment capacity, turnover, capital base and
profitability (Akande, 2016).

Challenges that SMEs face in Preparation of Accounting Records

One of the research questions was “what challenges SME face in preparation of accounting records?
This led the researcher to deeply investigate the exact challenges SME face and go through each
challenge as SME respondents explained. The detail is statistically presented in the following array by
showing what were discussed and observed by the respondents and researcher respectively.

Time Spent in Preparation of Accounting Records

1/4th people said it is time consuming as it takes a lot of time doing all recordings of transactions
accurately and in SME sector, the enterprise is always busy from day to night and this does not give a
manager enough time to keep accounting records. 4.4.2 Lack of Knowledge and Skills 16% said that
they did not have a good knowledge on how to keep accounting records. This was very true and the
researcher tried to find out how much knowledge they have on accounts record keeping. Some of the
causes for this lack of knowledge/ skills are as follows;

Entrepreneurship Seminars

SME can get various information and knowledge from attending seminars. By asking this question,
the researcher found out just how many SME attend seminars as seen on below table.

Accounting Records Procedures

Accounts recording procedure should include the following:

(i) Identifying/Analyzing; determining the financial significance of a transaction in order to record it
properly.
(ii) Recording; writing up the financial data in the books of accounts.
(iii) Summarizing and computing; summarizes all transactions made and calculate total balance in
each account recorded.
(iv) Reporting; communicating the results.
15
(v) Interpreting; gives a fair view whether a business makes profit/loss in that particular period of
financial year.
The first three activities are considered to be bookkeeping while the last two activities are on the
reporting part.
10
How to keep Accounting Records
A journal is a book where you record each business transaction shown on your supporting
documents, and a ledger is a book that contains the totals from all of your journals. It is organized
into different accounts (Department of Treasury, Internal Revenue Service Publication 583, 2007).

Types of Accounts SMEs should Record

SME Beginners should keep the few accounts since the business is small and only have few
transactions as explained by Sarapaivanich and Kotey (2006):

(i) Sales account: Sales Book records all transactions involving the sale of goods or services.
Information recorded include date, invoice no., amount, customer name and type of
transaction – whether cash or credit.

(ii) Purchases account: The Purchases Book records all transactions related to the acquisition
of raw materials or inventory. Information recorded include date of purchase, purchase
order No., stock number of item purchased, purchase price, and whether bought on credit
or cash.
SME that have been in business for longer period of time are required to keep more accounts which
will cover all larger transactions that take place in the business: Among others the following are some
of them:
(i) Debtors account: The Accounts Receivable ledger is useful for monitoring the level of
receivables for each customer. If products or services are paid for at time of delivery, you
will not need an accounts receivable tracking system. However, if you provide services or
products for which people pay you at a later date, your accounts receivable records keep
track of what is owed to you. You can monitor accounts receivable by holding on to a copy
of all invoices sent out or by keeping accounts receivable record. Either way, the
information you need to capture includes: invoice date, invoice number, invoice amount,
terms, date paid, amount paid, and the name of the entity being billed.

(ii) Creditors account/Accounts payable: Accounts Payable ledger, keeps track of amounts
owed to suppliers/creditors. Knowing the level of the accounts payable and when these
are due makes for better cash control and also contributes to establishing a good credit
standing with your suppliers and creditors. Regardless of the system chosen, the business
should retain the following information about accounts payable: invoice date, invoice
number, invoice amount, terms, date paid, amount paid, balance (if applicable), and
clients names and address.

(iii) Cash account: this account records all the receipts and payments made in the business.

(iv) Stock account: Keeping on top of the inventory records will prevent pilferage, keep
inventory holdings to a minimum, and track buying trends, among other things. The crucial
inventory information you need to capture is: date purchased, stock number of item
purchased, purchase price, date sold, and sale price.

11
 (v) Financial Statements: financial statement is the result of the activities of an entity and is
prepared to help interested persons decide on questions such as whether to lend it money
or invest in its shares. Financial statement analysis can be seen as part of the link between
the financial statements and the decision making process. Financial Statement is made up
of trading, profit and loss account, balance sheet and the statements of source and
application of fund statements is often included. (ACCA, 1998). Financial statements are
the provision of information to meet the needs of the accounting information.

Ways to keep Accounting Records

Small and medium enterprises can keep accounting records using two ways:
 Accounting Software
 Hire Accountant /Professionals

Public Organization or Government Influence on SME Awareness towards Accounts Record Keeping
In recognition of the importance of SME sector, the Government has continued to design and
implement a number of policies and programs supportive to the development of the sector as seen in
the literature review.

The researcher discovered few things through the interview with different staff officers;
(i) The organizations admitted that most SMEs do not keep accounting records
(ii) The organizations normally gives out business seminars all over the country to all SMEs
(iii) In the seminars, education is provided on how to keep accounting records and its importance to
the performance of the business. But the organizations say that most SMEs normally do not attend
such seminars and thus it becomes difficult to educate them about accounting records.
(iv) Some of the reasons that make SMEs not to attend the seminars are; most SMEs want some kind
of payment whenever they attend the seminars as a way to make their time worthwhile, SMEs do not
want seminars that require them to pay for participation, location of the seminars to be far from their
business place.

The government has been assisting SME development by giving seminars on entrepreneurship,
hosting trade fairs for different entrepreneurs and conducting training from time to time.
However SME respondents had explained that the government assists them but have not successfully
make SME aware of the importance of record keeping and everything else involved in the matter.
The researcher had consulted SIDO on the matter and agreed that most SME owners are not aware of
accounts record keeping and it has become an obstacle towards growth and better performance. The
organization tries to host different seminars on the matter but it was said that SME attendance is
always not encouraging; most of them only show up when they are getting paid or given some sort of
reward.

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 METHODOLOGY

Method of data collection

To achieve the objectives of the study, a descriptive design such as surveys and questionnaires were
employed as the major techniques for primary data collection. In addition, information was obtained
from books, magazines, journals, research works and even from the internet.

About 100 questionnaires will be distributed to specific small and medium enterprises that would
surely return them back. The researcher will use kind language and respect to the enterprises.
All data will be collected and checked before they are presented and analyzed to ensure
completeness, accuracy, and validity. By completeness, it means all questionnaires will be checked to
see whether all questions have been answered and handed-over. Either, questions are checked if
they are complete and the meaning corresponds to the data needed. By clarity, it means data will be
checked if they are correct and correspond to the question’s requirements. By validity, data will be
checked in terms of time reported and if they conform to the objectives of the study. This will
facilitate proper presentation in terms of tabulation, charts and graphs generation and computation
of percentage and frequencies.
Discussion and Analysis will be done in accordance with percentage and frequencies generated and
interpreted accordingly. By doing so, the researcher will be able to discover whether data collected or
information provided has been in alignment with the stated research objectives and questions.

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Gender of the Respondents
Gender

Male
44%
Female

56%

The findings indicate that 56% of the respondents were male while 44% of the respondents were
female. This indicates the number of males involved in filling the questionnaires for the study was
higher than that of female.

Level of Education

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 Level Of Education
50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Primary School Secondary School Middle College University

Level Of Education

From the findings, majority of the respondents (45.7%) had middle college education, 38.7% had
university level education, and 9.9% had secondary education while 5.8% had primary education. In
view of the above, the study concludes that most of the SMEs were in a position to make informed
choices in regard to the questions posed in the questionnaire.

Age of the Respondents

Age Groups
45.00%

40.00%

35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
Under 30 years 30-39 years 40-49 years 50 years and above

Age Groups

15
The findings indicate that 40.3% of the respondents were aged under 30 years, 24.9% were aged 30-
39 years, 19.8% were aged 40-49 years, while 15% were aged 50 years and above. These results
therefore show that a large number of individuals under the age of 30 years managed most SMEs.

Form of Business Organization

Form of Bussiness
40.00%

35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
Sole Proprietor Partnership Cooperative Public Company

Form of Bussiness

Nature of the Business

The researcher also wanted to know the type of business ownership each respondent had. Of 100
respondents; 33.90% were individual (sole proprietorship) businesses, 19.50% were formed from the
Partnership and 24.6% indicated Cooperative and the rest were Public Company. Most SMEs had Sole
Proprietorship and Partnership form of business. The finding show that changes in the business
environment may transform the grounds on which SMEs conduct their business. Consequently,
adaptation, new relationships and creativity may emerge as a way to overcome scarcity of resources
and/or difficulties in gaining access to resources that contribute to their competitive advantage.
16
Survey Finding

Survey Output
SA A N D SD
60%

50%

40%

30%

20%

10%

0%
1 2 3 4 5 6 7 8

From table above, 19% of the respondents strongly agree that record keeping is essential for decision
making and business adjustments, 41% agree, 11% were not sure, 21% disagree, and 8% strongly
disagree. This indicates that record keeping is essential for record keeping is essential for decision
making and business adjustment. Appropriate decisions was made about expansion or not or incur
costs or not all these decisions are based on complete records. Also, 22% of the respondents strongly
agree that record keeping reduces operating costs, improves efficiency, and productivity, 45% agree,
16% were not sure, 12% disagree and 5% strongly disagree. This indicates that record keeping
reduces operating costs, improves efficiency and productivity, and most of the respondents used
these records to evaluate performance of their businesses. Furthermore, 17% of the respondents
strongly agree that accounting records support business audit and research, 50% agree, 23% not sure,
17
an 8% disagree and 2% strongly disagreed. This indicates that accounting records support business
audit and research implying that most of the respondents carried out business audit. However, 7% of
the respondents strongly agree that complete accounting records are essential for preparation of
financial statements, 28% agree, 51% were not sure, 14% disagree. This implies that most of the
respondents did not prepare financial statements since they were not sure whether complete
accounting records are essential for preparation of financial statements. More so, 22% of the
respondents strongly agree that accounting records assist in resource allocation and performance
planning, 45% agree, 21% were not sure and 12% disagree. This implies that accounting records assist
in resource allocation and performance planning. Resource allocation does not depend only on
record keeping but it also involves appraising the viability of the business to be undertaken through
capital rationing to effectively allocate the resources.
Moreover, 47% of the respondents strongly agree that Accounting records keeping increase the
chances of the business operating and achieving success, 28% agree, 3% were not sure, 17% disagree,
and 5% strongly disagree. This indicates that Accounting records keeping increase the chances of the
business operating and achieving success. In addition, 19% of the respondents strongly agree that
Records keeping provide information to enable the control of cash in the business, 45% agree, 7%
were not sure, 25% disagree, and 4% strongly disagree. This indicates that records keeping provide
information to enable the control of cash in the business. Lastly, 31% of the respondents strongly
agree that Records keeping help in detecting thefts within the business itself, 42% agree, 4% were not
sure, 17% disagree, and 6% strongly disagree. This indicates that Records keeping help in detecting
thefts within the business.

18
 Conclusion
According to the findings presented and discussed, this study concluded that accounting records are
used to assess the profitability of alternative courses of action, measure performance, and evaluate
the position of enterprises in term of profitability, liquidity, activity and leverage. It can be used to
improve SME performance, especially financial decisions. Different capital structures cause different
degrees of financial risk. Different alternative financial plans affect SMEs performance differently.
Thus, proper accounting record is a key to SMEs success.
The success of implementation of the use of accounting records will depend very much on the SMEs
themselves, public and private sectors. SME face a lot of challenges which hinder them in the whole
process of keeping accounting records. However, they can overcome the challenges and be able to
keep accounting records; SME owner can organize his workers in a way that there will be enough
time for each transaction to be recorded into the books of accounts, they can acquire knowledge by
attending proper education in institutions and entrepreneurship seminars that focus on educating
record keeping. They can also keep proper documents by making sure each detail is recorded into the
books of accounts correctly.
SME owners are not aware of the procedures of keeping accounting records and most of them prefer
to keep accounting records themselves rather than hiring a professional which is expensive but more
efficient because professional accountants are well aware of every procedure involved in keeping
accounting records.
Most of SME owners don’t keep accounting records successfully, they fail to record each detail
required on the books of accounts. For example; they can ignore to keep dates, month, and full name
of a customer or supplier. Private and public sectors assist SME on various issues relating their growth
such as providing seminars on entrepreneurship, trading activities. After seeing different findings, a
researcher concluded that SMEs are not aware of the importance of keeping accounting records in
relation with performance of their business and little support from other sectors concerning how to
manage their finances which include the whole idea of accounting record keeping.

19
 References:

Paper 1:
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
William G. Nickels, James M. Mchum and Susan M. Mchum, (1999), Understanding Small Business
(5th Edition)

Paper 2:
Abayomi, K. S. & Adegoke, A. J. (2016). The imperatives of accounting and financial records in the
development of small scale enterprises in Nigeria. Research Journal of Finance and Accounting, 7(14),
43-52. Retrieved from www.iiste.org
Fellingham, G.A., 2005. Information economics and management accounting: A brief personal
perspective. Journal of Management Accounting Research, 17,145-152. doi:
10.2308/jmar.2005.17.1.143

Appendix
20
Survey Forms:
1.
The impact of accounting records keeping
Small Scale Firms
Email:

Gender:
 Male
 Female

Age:
 Under 30
 30-39
 4-49
 Above 50
Are you aware of records keeping in businesses?
 Yes
 No
 Maybe
Record keeping is essential for decision making and business adjustments.
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
Record keeping reduces operating costs, improves efficiency and productivity.
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
Accounting records support business audit and research.
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
Complete accounting records are essential for preparation of financial statements.
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
Accounting records assist in resource allocation and performance planning.
21
  Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
Accounting records keeping increase the chances of the business operating and achieving success.
 True
 False
Records keeping provide information to enable the control of cash in the business.
 True
 False
Records keeping help in detecting thefts within the business itself.
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree

2. Questionnaire
SAMPLE QUESTIONNAIRE
Part A
Business Identification
1. Location of Business:

2. Name of your Business:

3. Gender: Male ( ) or Female ( )

4. Type of Ownership:

(i) Individual ( )
(ii) Partnership ( )
(iii) Agency ( )
(iv)Others:

5. Education Level of the owner

(i) Primary school ( )

(ii) Secondary School ( )
(iii) Graduate ( )
(iv)Others:

6. When did your Business established?

(i) 1980-1990 ( )
22
(ii) 1991-2000 ( )
(iii) 2001-2010 ( )
(iv) 2011-2020 ( )

7. How did you get Capital to start your Business?

(i) Own Money/Family ( )

(ii) Friends ( )
(iii) Bank Loan ( )
(iv)Others:

Part B
Awareness of Accounting Records and Financial Procedures

8. Do you normally Record all Transactions in business?

(i) Yes ( )
(ii) No ( )

9. Do you have any Educational Background in Record Keeping?

(i) Yes ( )
(ii) No ( )

10. Do you keep Accounting Records by yourself or you Hire Professionals (Accountants)?

(i) Self ( )
(ii) Hire Accountants/Professionals ( )

11. What Accounting Packages are used?

(i) Quick books ( )

(ii) Tally ( )
(iii) Pastel ( )
(iv) None ( )
(v) Others:

12. What Accounting Records do you normally keep?

(i) Profit and Loss account ( )

(ii) Debtors and Creditors account ( )
(iii) Financial Statement ( )
(iv) Cash account ( )
(v) Stock account ( )
(vi) All of the above ( )
23
13. Are all Cash Receipts recorded in the Books of Accounts?

(i) Strongly Agree ( )

(ii) Agree ( )
(iii) Neither Agree nor Disagree ( )

14. Are Dates, Descriptions and Amounts recorded on Cash Sales Receipts?

(i) Yes ( )
(ii) No ( )

15. Are Bank Deposit Slips filed for Proper Management of Financials?

(i) Yes ( )
(ii) No ( )

16. Do all Payments get recorded into the Books of Accounts?

(i) Yes ( )
(ii) No ( )

17. How often do you Keep Accounting Records?

(i) Always ( )
(ii) Occasionally ( )
(iii) Never ( )
18. Do you have attended current entrepreneurship seminar?

(i) Yes ( )
(ii) No ( )
If yes, how many:

19. Do the Seminars explain or elaborate how to keep records effectively?

(i) Yes ( )
(ii) No ( )

20. Which are the Benefits you have attained after keeping Accounting Records in your Business?

(i) Open new branch of business ( )

(ii) Success payment of Debts /dividends ( )
(iii) Decrease loss in my business ( )
(iv) Access to bank loans ( )

24
Part C
Challenges and Suggested Solutions towards Proper Keeping of Accounting Records

21. Which Problems/Challenges do you experience in Keeping Accounting records?

.............................................................................................................................
.............................................................................................................................

22. In your opinion:

What are Suggestions on Improving the Accounting Practices of Small and medium enterprises?

Part D
Public and Private Organizations’ Influence

23. Do Private Organizations assess SMEs into the use of Accounting and Financial Procedures
promoting the Business?

(i) Yes ( )
(ii) No ( )

24. Do the Government play role on influencing the use of accounting records?

(i) Yes ( )
(ii) No ( )

Excel Sheet Data:

Gende Q Q Q Q Q Q Q
Emails r 1 2 Q3 4 5 6 7 8
Femal
2120541@iub.edu.bd e SA A SA SA SA T T SA
2021514@iub.edu.bd Male SA SA SA SA SA T T A
muhaimen132@gmail.com Male SA SA SA SA SA T T A
tehjib7@gmail.com Male A N SA SA A T T SA
shamimstreetwalker@gmail.com Male SA A SA A A T T A
Femal
1810194@iub.edu.bd e SA A A A SA T T SA
fahimabrarasif@gmail.com Male N N N A A T T N
tazdidalam@gmail.com Male SA SA A SA N T T SA
mdpappu5500@gmail.com Male SA SA SA SA SA T T SA
S
jerry09gaming@gmail.com Male SA D D D A T F D
apufarin@gmail.com Femal D A SA S A F T SA

25
 e D
S
prantanathnayan@gmail.com Male D A SA D A F T SA
errordisrupt@gmail.com Male A SA A D SA T T A
Femal
sbpinky45@gmail.com e SA SA SA SA D F T A
Femal
2120629@iub.edu.bd e A A A A A T T SA
S S
tahanawal69@gmail.com Male D D SD D A F F D
Femal
alsauda520@gmail.com e A A A SA SA T T A
Femal S
momjiraghatafifa@gmail.com e SA SA SA D SA T T D
2120882@iub.edu.bd Male SA D A A A F F A
Peyal.tiger@GMAIL.COM Male N N N N N T T N
asifkhanlul@gmail.com Male A A SA D SA T F N
Femal S S
Tahirajannat13@gmail.com e SA SA A D D F F D
Femal
sumiya11998@gmail.com e SA SA SA SA A T T A
jannatuljomjomjannatul@gmail.c Femal
om e D SA A SA SA F T SA
Femal
jinnatunhossain16@gmail.com e SA SA D SA SA T T SA
Femal
abontimuzib17@gmail.com e A A SA A SA T F A
Femal
khushnudmashiat1@gmail.com e A D SA D SA T T SA

Distribution of responses on the impact of accounting records keeping in small scale firm performance

Questions SA A N D SD
Record keeping is essential for decision making
and business adjustments. 41% 21% 16% 14% 8%
Record keeping reduces operating costs, improves efficiency and
productivity. 45% 16% 12% 12% 5%
Accounting records support business audit and research. 50% 23% 17% 8% 2%
Complete accounting records are essential for preparation of
financial statements. 28% 51% 14% 7% 0%
Accounting records assist in resource allocation and
performance planning. 22% 45% 21% 12% 0%
Accounting records keeping increase the chances of the business
operating and achieving success. 47% 28% 3% 17% 5%
Records keeping provide information to enable the control of
cash in the business. 19% 45% 7% 25% 4%
Records keeping help in detecting thefts within the business 31% 42% 4% 17% 6%
26
itself.

27