THE NEED FOR ACCOUNTING EDUCATION IN SMALL SCALE INDUSTRIES

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF STUDY

Accounting is an old as the exchange process (Whether) barter or monitory that gradually developed with civilization. We study accounting for business and not business for accounting, second communication and exportation of business idea seen to be the most important function of accounting as it relates to business, it is a fact that business organization cannot do without making use of accounting information and ideas in their day to day activities the significance of accounting education in a developing nation such as ours cannot be played down, in short, accounting evolved in orders to locate responsibility prevent fraud guide industries in their bids in attendance of their organization goals, it equally provide solution to their numerous problems. Development of small scale industries in most rural areas as peasant  training on palm produce with crude milling equipment and probably few important training, the genesis of small scale industries began from the processing of food down to the manufacturing of basic tools and other implement for our daily use. Every small scale industrialist has profit at the back of his mind before carrying out the project at the higher the amount, the more prove to accountability so small scale industrialist should be able to give account. It is therefore important that small scale enterprise be well equipped with proper accounting because it will ensure confidence and proper financial procedure, Hence, good record keeping give in details the knowledge of expense in come as profit or loss is the first step towards profitable management of any business.

Businesses can be classified in various ways using different parameters. Some of the known parameters used in classifying businesses include: their sizes, their nature and modes of operation, their location and area of coverage, their asset base, as well as their capital base. These attributes have resulted in businesses being classified as small, medium and large scale. The Small and Medium scale Enterprise (SMEs) make up a vital part of our business systems today and employs more people than the government and large enterprises. In Nigeria, the small and medium enterprises provide the most important vehicle for both the government and large scale enterprises to thrive. The SMEs are more commonly involved in trading, provision of services and craft production activities. The SMEs in Nigeria contribute significantly to the national economy and growth by the volume of employment they provide to the citizenry and by the amount of tax revenue it remits to the national coffers. However, there is most often the issue of how much tax liability to be paid by these SMEs. The tax authorities often reject the returns and accounts prepared by these SMEs and label them as incorrect because it is believed that the SMEs lack the capacity, the skills and proficiency to prepare accounts and returns to meet the requirements of the tax authorities.

There is therefore the need to evaluate the accounting skills needed for sustainable development of the SMEs in Nigeria especially in Taraba State which is assumed to have the highest number of SMEs in the country. Taraba State is situated in the North East part of Nigeria with a population of over seven million people and with over three (300) SMEs as at the last count. Therefore anything that affects the SMEs in the state will surely register a significant impact on the Nigeria economy and ultimately in the globe. What constitutes an SME has been adduced in various extant literatures, but there seems to be discordant tunes in agreeing to a common definition. Enebe (2007) states that differences in these definitions are usually influenced by the time or date of the definition, the economic situation in the country, capital source or outlay, number of employees and annual sales or sales volume. Enebe (2007) citing Elobuike (2002) also agrees that the concept of small-scale business varies from person’s interpretations. He quoted the Anambra State Government as having defined such businesses as those with a total paid employment strength of not less than five persons and not more than 50 persons and having a minimum fixed capital of One Hundred and Fifty Thousand Naira (N150,000). Nigeria council of Industries (2003) defines small and medium scale enterprise as an enterprise with an asset base ranging between N1.5 Million and N200 Million Naira including working capital but excluding cost of land but must have a workforce of eleven to three hundred workers. There seems to be no universally agreed definition of SMEs and the reason is that, no single definition can capture all the dimensions of Small and Medium Enterprises (SMEs).

That is, to say that a small and medium enterprise in one country might be viewed a large enterprise in another country and vice versa. However, SMEs are believed to be the engine room for the development of any economy because they form the bulk of business activities in a growing economy like that of Nigeria. According to Mukaila (2011) small and medium scale enterprise contribute to improved living standards, bring about substantial local capital formation, achieve high level of productivity, and the creation of jobs at relatively low capital cost, especially in the fast growing service sector. Belal (2013) observes that SMEs are vehicles for the reduction of income disparities thus developing a pool of skilled or semi-skilled workers as a basis for the future industrial expansion, improve forward and backward linkages between economically, socially and geographically diverse sectors of the economy. SMEs offer excellent breeding ground for entrepreneurial and managerial talent to thrive.

 1.2            STATEMENT OF PROBLEM

Small scale industries to play a major part in the overall economic development of nation a look at the Nigeria business  sectors show that small scales business are frequently but they either do not grow or they undergo negative growth.

At worse, those that cannot keep up with the harsh economic environment winds up one of the problem that hind success in small scale business as lack of relevant experience or lack of adequate accounting education that make for poor management of the industries, little attention is parts to this issue of accounting education.

Furthermore, lack of accounting education for small scale industries can arise due to:

1. Ignorance of the need for accounting education in the sense that they do not have accounting development to record their day to day transaction.
2. The do not employ experts who have the wide knowledge of accounting.

 1.3     PURPOSE OF STUDY

The purpose of carrying out this study is to ascertain:

1. Whether there is any relationship between accounting and management in business.
2. To investigate the necessity for the small scale industrialist to acquire knowledge of accounting.
3. To compare those managers with knowledge of accounting with those without such knowledge.
4. To see whether those without knowledge of accounting will be willing to participate in any program designed to provide then with knowledge of accounting.
5. To suggest avenues through which they can acquire knowledge of the accounting.

1.4   RESEARCH QUESTIONS

The study seeks to provide answers to the following questions:

1. What relationship exist between accounting education and effective management in businesses.
2. Do managers with accounting knowledge perform better than mangers without accounting knowledge?
3. What is the need for acquiring accounting education in the operation of a business?

1.5   RESEARCH HYPOTHESES

H0: There is no significant relationship between accounting education and effective management in businesses.

H1: There is a significant relationship between accounting education and effective management in businesses.

H₂0: There is no significant difference between mangers with accounting education and mangers without accounting education.

H₂1: There is a significant difference between mangers with accounting education and managers without accounting education.

1.6     SIGNIFICANCE OF STUDY

The study will be beneficial to many people in the following ways:

1. It will enable the (problems) proprietor to appreciate the needs to acquire accounting education.
2. Other intending business will also appreciate the need to acquire the knowledge of accounting, it they to manages their business effectively.
3. The government will not collect more revenue, but the expenses of collector such revenue will be reduced.
4. The industrialist will see the need for occasional auditing, the young accountant will be afforded the opportunities for gainful employment.
5. Those industrialist without the knowledge of accounting will not know avenues through which they can acquire accounting education.

 1.7    SCOPE AND LIMITATION OF THE STUD

This study would have been more extensive but for the following limitation raging form.

1)    Time:  The allotted time for the study is too short and more especially, they are not that text books in our institution library to carry out the research works, so as the researcher runs around from one library to the other researching for text books.

2)    Finance:    We are new in a very serious economic recession so, it is not easy to have sufficient money to understand a work of this nature, again the researcher is a student who is a worst hit during this tenure.

 1.8    DEFINITION OF TERMS

Technology or technical terms used in this study are defined below since majority of them may be liable to different interpretations.

Accounting: the classification recording and interpretation of business transaction so that periodic statement can be presented to medicate either the historical results of those transaction or the financial condition of the business.

Accounts:   A formal records of a transaction expressed in money and kept in a Journal.

Accounting records: The formal journal and ledgers and vouchers, in voice correspondences contracts and other success of support for the books of account.

Transaction:   A typical business event which can be expressed in monetary terms and most be entered in accounting records.

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