THE RELEVANT OF ACCOUNT IN A SMALL SCALE BUSINESS (A CASE STUDY OF CIVIL INDUSTRIAL LTD)
1.1 BACKGROUND OF STUDY
The small and medium scale industry has experience significance changes in terms of growth and survival in recent times as new business ideas and good accounting records are introduced into the sector although most of the small scale business (SSBs) are not registered as corporate bodies rather as a sole proprietorship, this made it easy for such business to get registered with stress than other form of business registration. It is evident that SMEs has grown in number more than other forms of business and could be found anywhere in Nigeria.
According to Boachie-Mensah and Marfo-Yiadom 2005) stated that in spite of their numbers, about 60% of the SSBs fail within the first five years of operation. Most SMEs fail because of their inability access finance from most of the financial institutions since they lack proper financial records as requirement according to (William, 2008).
It has been attributed that the inability of most small scale business to survive beyond the first few month of establishment and operation was due to lack adequate financing.
According to (Amoako, 2013) stated that to become successful and be able to contribute meaningfully to the economy of Nigeria, SMEs must be able to attract and secure finance by themselves.
Recent studies shows that larger firms will be able bring to themselves economic and certain sophisticated quantitative management techniques that may not practicable for small and medium scale enterprises. Small scale business may be able to maintain closer client relation and better customer relation than the bigger companies.
According to (Abdulrasheed, Khadijat and Oyebola, 2012) stated that the differences in operation techniques may influence the deficit in accounting method employed in generating financial information. Most firms can employ different principles such as different inventory techniques, depreciation method, method of accounting for income taxes and revenue recognition procedures etc.
In recent times most business unit become complex and broader on scope, accounting evolved in response to the increased planning and control responsibilities of management.
According to (Abdulrasheed, Khadijat and Oyebola, 2012) stated that as government grows in size and become more centralized in nature, accounting was developed to meet the increased accountability; business decision need to be supported by good and quality financial information which need to be relevant, user friendly and available in timely manner.
1.2 STATEMENT OF PROBLEM
The study came about due to the poor accounting method among the small scale business; poor accounting practice has limited the performance of SSBs in recent times, some the major problem faced by small business due to poor accounting or irrelevant accounting method includes their inability to access fund and other financial benefits such as loans from most of the financial institutions due to poor account records. The pivot behind the survival of small business (SSBs) is availability of capital, when most of the small business can no longer access finance then their operation becomes ineffective.
1.3 AIM AND OBJECTIVE OF STUDY
The main of the study is to examine the relevance of account in the growth and survival of SMEs in Nigeria. Other specific objectives of the study are stated below as follows:
- To examine the relationship between accounting records and the survival of SMEs in Nigeria
- To examine the effect of relevance of account on the performance of SMEs in Nigeria
- To investigate on other factors affecting the growth of SMEs in Nigeria
- To examine the role of accounting in the growth and survival of small scale business
- To proffer solution to the above stated problems
1.4 RESEARCH QUESTIONS
The study came up with the following research questions in order to ascertain the aim and objectives of the study. The research questions are:
- Is there any relationship between accounting records and the survival of SMEs in Nigeria?
- What is the effect of relevance of account on the performance of SMEs in Nigeria?
- What are the factors affecting the growth of SMEs in Nigeria?
- What are the roles of accounting in the growth and survival of small scale business?
1.5 RESEARCH HYPOTHESIS
H0: There is no significant relationship between accounting records and the survival of SMEs in Nigeria
H1: There is significant relationship between accounting records and the survival of SMEs in Nigeria
1.6 SIGNIFICANCE OF STUDY
The study will be of immense benefit to the small business owners in Nigeria, the state and the federal government of Nigeria, the study will also benefit the financial institutions in Nigeria and other researchers that wishes to carryout research similar to the above topic as it will discuss the relevance of account in the growth and survival of SMEs in Nigeria
1.7 SCOPE OF STUDY
The study the relevance of account in the growth and survival of SMEs in Nigeria is limited the small scale enterprises, the financial institutions in Nigeria
1.8 LIMITATION OF STUDY
Financial constraints: financial constraints tend to impede the speed of the researcher in getting all the relevant materials needed for the research work; however the researcher was able to get meaningful information from the available materials for the purpose of the research work
Time constraints: the researcher being a student will be involved in other departmental activities like attending lectures, submission of assignment and presentation of seminars; the research student however was able to meet up with the research work before the deadline of the project defense
1.9 DEFINITION OF TERMS
RELEVANCE: is simply the noun form of the adjective "relevant," which means "important to the matter at hand
Amoako Gi. K. (2013) Accounting Practices of SMEs: A Case Study of Kumasi Metropolis in Ghana. International Journal of Business and Management; Vol. 8, No. 24; 2013 ISSN 1833-3850 E-ISSN 1833-8119 Published by Canadian Center of Science and Education Anyigbo C. I. (1999). “Cost and Managerial Accounting Decision Emphasis”.Enugu: Itugo2 Publication Limited. Aryeetey, E., Baah-Nuakoh, A., Duggleby, T., Hettige, H., & Steel, W. F. (1994). Supply and Demand for Finance of Small-Scale Enterprises in Ghana. World Bank Discussion Paper No. 251. Washington, D.C.: The World Bank. http://dx.doi.org/10.1596/0-8213-2964-2. 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