THE IMPACT OF ACCOUNTING RECORDS ON PERFORMANCE OF BUSINESS ORGANIZATION IN EKITI STATE
Background Of The Study
Keeping proper and Adequate Accounting records is the beauty of both infant and developed establishments. The records of accounting information can never be overemphasized for business aiming to be successful, and if overemphasized it means nor growth nor development would be achieved and most of the organizations aims would also be difficult to achieve. Therefore it impact should be emphasized for greater consideration of accounting information keepers and users to achieve the stated objectives of the business, prevent fraud, and to have a proper return from the business.
Accounting has always been an important components of the record keeping and control in organizations. These accounting control system, for most past are based on double entry accounting practices developed in the private sector. The role of accounting practices in public organization is expanding, however, as a consequence of the increased attention recent years to the need for greater economy, efficiency and effectiveness in the operation of government. There is growing recognition that in addition to the function of financial record keeping and external reporting, accounting can and should serve on a tool for management planning, decision making and control. God record keeping is time-consuming and can take away from the time you need to run your business.
A successful business rests on sound record keeping practices and solid cash flow. Without good records it is impossible to determine the financial condition or profitability of a business. Similarly, in order to survive, a small business must achieve a positive cashflow in the long term. This financial guide provides the basic information the owner of a small business need to establish good record keeping practices in your business and to minimize cash flow problem. Large and medium-size companies have internal accounting personnel and sophisticated records and systems to guide management. On the other hand, the owner of a small business usually relies primarily on a book-keeper and an outside accounting firm to maintain the company’s record and provide guidance. Therefore, the small business owner should be familiar with and recognize the important of proper record keeping requirements and provide guidance on cashflow planning.
Record keeping plays a key role in management of knowledge necessary for good business performance. Modern organizations are concerned with the capture, use and storage of knowledge. Record keeping provides evidence of how the transaction was handled and substantiates the steps that were taken in order to comply with business standards. Record keeping is the foundation on which compliance program should be built upon. Measures should be put in place to capture the documentation and events that takes place throughout transaction commencing from delivery and payment (Reed, 2010).
Record keeping conveys substantial information about the financial strength and current performance of an enterprise. Mangers find organizational statements useful in making decisions. As managers develop operating plans, they think how those plans will affect the performance of the organization (Onaolapo, 2014).
According to Ikechukwu (1993) keeping records is crucial for the successful performance of a business. Records helps entrepreneur to develop accurate and timely financial reports that show the progress and current condition of the business. Accurate record of the business financial performance is a vehicle to monitor performance in specific areas.
Regarding accounting control procedures for small and medium enterprises Sathyamoorthi (2001) observed that it is important to have systems of control over all business activities that are well implemented to help ensure: protection of resources against waste and fraud, accuracy and reliability in accounting data and success in the evaluation of the performance of the business. Relying on professional accountant, small firms can get the competencies that they need (Curley, 2005).
In the context of SMEs, accounting information is important as it helps firms manage their short term problems in critical areas like costing, expenditure and cash flow by providing information to support monitoring and control (Mitchell, 2000). Thus financial reporting systems are necessary to ensure that SMEs economic resources are used effectively and efficiently in pursuit of its goals. It also follows that there is a particular need in growing SMEs for the skills of financial analysis which will allow financial 8
statements to be read and understood, whether they contain historical or forecast information (Mcmahon, 1995).
The cashbook is an account used to record all cash transactions in an organizations, cash receipts are debited while cash payments are credited. The journals are used to record all financial transactions that take place in an organization. Petty cash book can also be maintained to record the withdrawal of a predetermined sum from the main cashbook for use in payment of miscellaneous expenses.
In some modern organizations, accounting records are maintained by means of elaborate computer system. The balance on each journal is obtained by adding the credit and debit sides and deducting the smaller figures from the larger. These balances will be used to prepare a trial balance.
In the period after independence, many developing countries of Africa attempted to achieve industrialization through public investment in large scale business. The budgets and development plans of these countries were tailored toward investment in elephant projects with little economic viability and market prospects majority of these large firms were unable to succeed without heavy protection and subsidies. Specifically, the development of small-scale industries in Nigeria started in the middle of 1970s. Several attempt have been made to establish a viable and successful small scale industrial climate and to improve the crude method of record keeping in small and medium scale business.
Statement Of The Problem
Most Nigeria small scale business lacks the knowledge of the impact of keeping adequate and good accounting records. Perhaps because of their thinking that they are small scales compared to the large business with larger transactions. This thinking is tremendously affecting the operations of small and medium scale enterprise in Nigeria which can easily result in the perpetration of fraud and embezzlement of fund in the small business, due to the mismanagement and crude preparation of accounting records. An assessment of numerous write-ups and policies of keeping accounting records shows some shortcomings that need urgent attention, thereby making the business owners to understand the need for proper record keeping and it impact on their business. This is what the project is set to look into and to suggest and project a lasting solution to these problems.
Objectives Of The Study
The broad purpose of these work is to look at the impact of accounting records on performance of business organization specifically, the objectives of this research are to;
- To assess the impact of accounting record on performance of business enterprises in Ado metropolise
- To examine the availability of accounting record in business enterprises
- What are the impact of accounting record on performance of l business enterprises?
- Is record keeping available IN BUSINESS ENTERPRISES in?
- Are there Challenges Faced By small business enterprises in keeping accounting records?
Significance Of The Study
The main purpose of accounting in business is to present financial information in a sufficiently systematic manner that can be understood by the users. The first step towards this goal is recording and classifying of accounting transactions.
Keeping good business records helps to demonstrate the financial position of banks and other lenders and also to prospective buyers of the business. This study helps to explore the importance of keeping adequate records so as to improve the business performance.
This study explores that good record provide the financial data that helps in operating more efficiently, thus increasing profitability.
Accurate and complete records enables the owners and the accountant, to identify all business assets, liabilities, income and expenses, which this study is trying to explain that information, when compared to appropriate industry averages, helps you pinpoint both the strong and weak phases of the business operations. Furthermore, the study helps to understand that good records are essential for the preparation of current financial statements, such as the income statement (profit and loss) and cash-flow projection.
Limitation of the study
Financial problem; the study needed a lot of money for many functions. For example, printing questionnaires, feeding, traveling to the places where the respondents were located. Financial problem seem to be a big factor that affected the study.
Time management; the time allocated for the research was not enough to gather the information from the field and interpret it. However, the researcher tried to do most of the activities of the research in time basing on the researcher’s work plan.
Lack of cooperation; Respondents’ unwillingness to disclose financial information on their businesses created data collection problems, which affected the reliability of the findings.
Lack of financial records in SBEs in Uganda and ambiguity surrounding quality measurement led use of to restricted and subjective measures. Consequently, performance measurement was as well restricted thus the use of performance indicators.
DEFINITION OF TERMS
MICROFINANCE:- A very small deposit and loans are refer together as microfinance (Johnson, 1999).
CONTROL:- This is concerned with the efficient use of scarce resources to achieve a previously determined objectives or set of objectives contained with a plan (Lucey, 2000).
FRAUD:- When a person dishonestly with a view to gain for himself or another or with intent to cause loss either destroys, defaces, conceals or falsify an account or record or makes an account to his knowledge is misleading, false or deceptive (Alan 1984).
MISMANAGEMENT:- This is the deliberate use of funds meant for other things, for personal activities.
SMALL SCALE:- Not large in size or extent, limited in what it does and in relation to organization.
TRANSACTION:- A piece of business that is done between people especially an act of buying and selling or service rendering.
FILING SYSTEM:- The act of putting several documents, letters together or placed in an official record for the purpose of safeguarding and evidence of transaction.
ORGANIZATION:- A group of people who form a business together in order to achieve a particular goal.
POLICY (IES): A set of interrelated and consistent plan and decision rules (premehad, 1996).
The post THE IMPACT OF ACCOUNTING RECORDS ON PERFORMANCE OF BUSINESS ORGANIZATION IN EKITI STATE appeared first on TY Computer Institute.