The Project File Details
- Name: ACCOUNTING SKILLS NEEDED FOR EFFECTIVE MANAGEMENT OF SMALL SCALE ENTERPRISES IN OSHIMILI SOUTH LOCAL GOVERNMENT AREA
- Type: PDF and MS Word (DOC)
- Size: [163 KB]
- Length:  Pages
This study investigated accounting skills needed for effective management of small scale enterprises in Oshimili South Local Government Area, Delta State. Four research questions guided the study. The research adopted the survey design approach. The population of the study comprised personnel in accounting departments and operators/owners of small scale enterprises in the area of the study. a total of forty-two (42) sample was selected using a simple random sampling technique. Questionnaire was used as instrument for data collection which consisted a 20-item on a 4-point scale. Mean and standard deviation were used to analyse data collected. The findings of the study revealed that Microsoft Excel, Peachtree and other fundamental accounting skills are needed by small scale enterprises together with the benefits accruable to firms that acquire these skills. Based on the findings of the study, the study recommends that most of the accounting skills are needed to enhance this business enterprises acumen and improve their profit margin. These skills are relevant for successful management of small scale enterprises. Also these needed accounting skills do not differ significantly with the skills required by large enterprises. The paper concludes that the acquisition of accounting skills by owners of small scale enterprises is of utmost importance given the numerous contributions that are inherently accruable to owners and operators of small scale enterprises. The paper recommends massive and regular training of the owners and operators of SMEs nationwide on the accounting and business.
TABLE OF CONTENTS
Title Page i
Table of Contents v
List of Tables vi
1.1 Background to the Study 1
1.2 Statement of the Problem 5
1.3 Purpose of the Study 7
1.4 Research Questions 7
1.5 Significance of the Study 8
1.6 Scope of the Study 8
1.7 Operational Definition of Terms 9
REIVEW OF RELATED LITERATURE
2.1 An Overview of SMEs 11
2.2 The Need for Accounting Skills for Successful Management 15
2.3 Users of Financial Information Relating to a Business 19
2.4 The Importance of Accounting Knowledge 22
2.5 Financial Statement Definition 22
2.6 The Objective of Financial Management 23
2.7 The Assumption of Financial Statements 24
2.8 Qualitative Characteristics of Financial Statement 25
2.9 The Modern or Computerized Accounting Skills required
by Small Scale Sector 27
2.10 Manual Accounting Skills Required by other Entities in the
Small Sector 29
2.11 Analysis of Financial Statement 44
3.1 Design of the Study 46
3.2 Population of the Study 47
3.3 Sample and Sampling Technique 47
3.4 Instrument for Data Collection 48
3.5 Validation of the Instrument 49
3.6 Reliability of the Instrument 49
3.7 Method of Data Collection 50
3.8 Method of Data Analysis 50
DATA ANALYSIS AND DISCUSSION OF RESULTS
4.1 Data Analysis 52
4.2 Major Findings of the Study
4.2 Discussion of Results 59
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 62
5.2 Conclusion 64
5.3 Recommendations 64
5.4 Contribution to Knowledge 65
5.5 Limitations of the Study 66
5.5 Suggestions for Further Research 66
LIST OF TABLES
- Gender Distribution of the Respondents 52
- Number of Years of Establishment 53
- Educational Qualification of Respondents 54
- Mean Response Scores of Respondents on the Microsoft Excel Accounting
Skills needed for Effective Management . 55
- Mean Response Scores of Peachtree Accounting Skills needed for Effective Management. 56
- Mean Response Score of Respondents on the Fundamental Accounting Skills needed 57
- Mean Response Scores of Benefits of Accounting Skills 58
- Background to the Study
Small scale enterprises have been adjudged to act as catalyst in the economic development of any country. Small and Medium Scale Enterprises (SMEs) have been described as possessing great potential for employment generation, improvement of local technology, output diversification, development of indigenous entrepreneurship and forward integration with large scale industries (CBN, 2011). SME can be defined based on certain criteria including, turnover, number of employees, profit, capital employed, available finance, market share and relative size within the industry. The definition can be based on either some quantitative or qualitative variables. The SME sector comprises very different types of businesses across a wide range of economic sectors. There are essentially two categories: those that are growth-oriented, and those small and micro enterprises that operate at the subsistence level to provide employment and income mainly for their owners and a relatively small number of external employees. Subsistence enterprises represent the vast majority of SMEs in developing countries. The definition and classification of SMEs in Nigeria is in terms of capital employed, turnover and number of employees. The CBN communiqué No 69 of the special monetary policy committee meeting of April 15, 2010 acknowledged the existence of several definitions of SMEs. One of such definition/classification states that an enterprise that has an asset base (excluding land) of between N5 million to N500 million and labour force of between 11 and 300 belongs to the SME sub-sector. SMEs have also been broadly defined as businesses with turnover of less than N100million, for the Small and Medium Enterprises Equity Investment Scheme (SMEEIS), a small and medium enterprise is defined as any enterprise with a maximum asset base of N1.5 billion (excluding land and working capital) with no lower or upper limit of staff.
Developing countries like Nigeria that require sustained economic growth in their economies must pay attention to the SME sector and harness the great potential to generate employment, improved local technology, output diversification, developed indigenous entrepreneurship and forward integration with large-scale industries that can be provided by the sector. Unfortunately, the SMEs in Nigeria have underperformed despite the fact that the SMEs in Nigeria constitute more than 90% of Nigerian businesses, their contribution to the nation’s GDP is below 10%. SMEs account for a large proportion of the total employment growth many countries. In such countries, SMEs produce a significant share of their increases in Gross Domestic Product (GDP), while the contributions of larger enterprises tend to remain stable (ADB, 2002). Nigeria is the most populous country in Africa and the eight in the world with a population of over 140 million people by 2006 census. With a nominal GDP of $207.11 billion and per capita income of $1,401 it has the second largest economy in Africa (Salami, 2011).
However, most of small scale businesses in Nigeria are not registered as corporate bodies but as sole proprietorship, this makes registration procedures quite simple and a bit easier than the other forms of business registration. Partly due to this phenomenon, SMEs has outnumbered all the other forms of business and could be found almost everywhere across the country. The Small and Medium and Large Enterprises are more commonly involved in trading, provision of services and craft production activities in Nigeria, the SMEs population comprises approximately 97% of all businesses. This sector plays a crucial role in the economy as an engine to generate economic growth and also has its contribution to the economy in other ways.
Cook (2001) highlighted some contributions of Small Scale Enterprises to include:
- the encouragement of entrepreneurship
- the greater likelihood that SMEs will utilize labour intensive technologies and thus have immediate impact on employment generation.
- The fact that they can usually be established rapidly and put into operation to produce quick returns.
- The ability of SME development to encourage both inter and intra, regional decentralization and ;
- The nation that they may become a counter veiling force against the economic power of larger enterprises. More generally, the development of SMEs is seen as accelerating the achievement of wider economic and socio-objective including poverty alleviation.
In spite of all these, recent studies show that 60-70 of these enterprises fall within the first three years of establishing and this has been attributed to lack of adequate financial accounting knowledge and skills by entrepreneurs who manage the affairs of these enterprises. In most industries, comparability will be affected by size. Larger firms will be able to avail themselves economic and certain sophisticated quantitative management techniques that may not be practicable for small ones smaller companies may be able to maintain closer client relation and better customers than the larger ones. The difference in operation technique may influence deficit in accounting method employed in generating financial information, (Abdulrasheed, Khadijat & Oyebola, 2012). Appropriate accounting application should be an active steering tool to run and manage a business.
Accounting is the process of recording business transactions in a systmatic form so that the financial position of the business can be communicated to the users of such accounting information. Accounting is the key to business success and is also found to be the most frequent problem to why these businesses cannot operate well. Accounting has aided in the development of these enterprises in the fields of science and technology and many other diverse fields by it direct assessment on the overall financial progress in pursuing their goals. The modern trend in information communication technology (ICT) has also affected the quality of performance of these enterprises. Over the years rapid advances in electronic accounting have been made and several programme and application software development to support the enormous transactions created by e-business; electronic technology driven accounting system which have added responsibility accounting and profitability accounting and recent concept (O’Brien, 1997).
Microsoft Excel is a package or application that has loads of calculation capabilities that help in computing total sales, profit and loss made by an organization preparation of bank and income statement etc. The graphic aspect of the Microsoft Excel packages is used in charts of different types and graph. Microsoft Excel package helps in inventory management and it is high sustainable for preparing an organizational payroll.
Peachtree accounting package helps recipients in Management Information System (MIS). Peachtree accounting skills provides knowledge of inventory management records as well as management of system frauds. It also provides adequate journal preparation and preparation of cash flow statement. Despite the revolution on our daily lives, small scale enterprises are very slow at adapting to the great resources. They fail to include the knowledge of modern accounting packages like Microsoft Excel, Microsoft Access and Peach Tree Accounting into their daily business lives. It is on the above premise that this study investigated accounting skills needed for effective management of small scale enterprises in Oshimili South Local Government Area, Delta State, Nigeria.
1.2 Statement of the Problem
Accounting is a very important aspect of any organization. Some Small Scale Enterprises have been observed to have accounting departments, yet they encounter ineffective management in the aspect of keeping records. The rapid technological changes in the methods of preparing, recording, analyzing, summarizing and interpreting financial transaction calls for a need for an introduction of modern accounting packages, system and skills in businesses. This is based on the fact that the wake of the millennium has witnessed dramatic changes in the manner accounting functions are been performed. The convergence of computer, telecommunication and e-commerce with business environment have brought to the force emerging ICT concepts and knowledge that were not used in Small and Medium Scale Entreprises (SMEs).
It has been observed that SMEs lack the accounting knowledge and skills necessary to perform accounting functions. Many SMEs lack skilled accounting personnel needed for the implementation of existing accounting rules and regulations or standard. SMEs lack access to expertise knowledge in accounting because accounting functions require not only knowledge of generally accepted accounting rules or tax regulations but also a knowledge of how to apply these rules on a given business environment but effective application of such knowledge for effective management of businesses. It is on this basis that this study investigated accounting skills needed for effective management of small scale enterprises in Oshimili South Local Government Area, Delta State, Nigeria.
1.3 Purpose of the Study
The main purpose of this study is to investigate the accounting skills needed for effective management of Small Scale Enterprises (SSEs) in Oshimili South Local Government Area, Delta State, Nigeria. Specifically, the sought to:
- Ascertain the extent to which Microsoft Excel sub skills needed by Small Scale Enterprises.
- Ascertain the extent to which Peach tree accounting sub skills required by Small Scale Enterprises.
- Determine the level of requirement of fundamental accounting skills needed by Small Scale Enterprises.
- Examine how accounting skills enhances good financial management of Small Scale Enterprises.
1.4 Research Questions
The following research questions were raised which guided the conduct of this study. In order for easy and effective collection of data the following research questions were formulated to guide the study.
- To what extent is the Microsoft Excel sub skill required by Small Scale Enterprises?
- To what extent is Peach tree accounting sub skills required by Small Scale Enterprises?
- To what extent are the fundamental accounting skills needed by Small Scale Enterprises?
- To what extent does accounting skills enhance good financial management of Small Scale Enterprises?
1.5 Significance of the Study
The findings of this study will be beneficial to Small and Medium Scale Enterprises in adopting pertinent accounting skills for effective management of business in the 21st century.
The findings of this study will be beneficial to Small Business Entrepreneurs to adopt and adapt accounting skills for effective management of their businesses for optimum growth.
It will be beneficial to business regulatory agencies in Nigeria to enforce the adoption of proper accounting skills in the management of SSEs for accountability.
The findings of this study will be of benefits to accounting graduates working in account departments in Small Scale Entreprises to acquire requisite accounting skills required for effective management of businesses in the present digital age. The study will enable business owners and individuals to be informed on considerable positive benefits of adaptation and/or adoption of accounting knowledge and skills for effective management of business for optimum performance and growth.
1.6 Scope of the Study
The study was narrowed down to acquisition and application of accounting skills such as Microsoft Excel, Peach tree accounting, cash book, income statement, balance sheet and cash flow statement by Small Scale Entreprises. The study did not cover medium scale and large scale enterprises.
1.7 Operational Definition of Terms
The following terms are operationally defined as used in this study.
- Accounting: it the recording, classifying and summarizing of financial transactions events in terms of money and reporting the result to management and other users of accounting information.
- Small scale enterprises: is any business enterprise with a capital not less than N150, 000 in manufacturing and equipment alone.
- Cash book: is the book for recording detailed particulars of all money relieved and paid.
- Balance sheet: it is a statement of the assets at a particulars moment in time and the liabilities and properties capital.
- Expenses: these are the costs of goods and services consumed during the accounting period.
- Assets: these are resources owned and used by a business organization for the purpose of realizing income or profit from the resources.
- Liabilities: these are amounts or resources owed by the business to outsiders.
- Profit: they are income derive into the business by the owner
- Management: it is the process of reaching organizational goals by working with and through people and other organizational resources.
- Financial statement: it is a formal record of the financial activities and position of a business, person, or other entity.
- Income statement: it is a financial statement that measures a company’s financial performance over a specific accounting period.
- Cash flow statement: it is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and finance activities.
- Peachtree accounting: is business accounting and management software that enables small and medium businesses to managing their books.
- Microsoft excel: is a business accounting software designed to support accounting function such as budgeting, preparing financial statements and creating balance sheets