ABSTRACT
This
study examined accounting system and entrepreneurial performance in Rivers
State. Data was collected from small and medium scale enterprises in Rivers
State. The statistical tools used in analysing the data were the simple
percentage and frequency tables, and the Pearson Correlation Coefficient. The
result revealed that there is significant relationship between accounting
system and the growth of small and medium scale enterprises in Rivers State.
Also, it was found that positive significant relationship exists between
accounting system and the profitability of firms. Hence it is concluded that
effective accounting system enhance entrepreneurial growth and reduces errors
in transaction. Therefore, it is recommended that small and medium scale firms
in the Niger Delta should establish sound and efficient accounting system in
their organization as it would enhance the growth of the company.
74 Pages
Project
Reference Code: C079
CHAPTER
ONE
INTRODUCTION
1.1 OVERVIEW
Accounting system is an integral part
of every business organisation. Hence, its importance to the growth of
entrepreneurial firms in Nigeria cannot be overemphasized. Entrepreneurial
business venture such as small scale firms engage in numerous transactions that
affects the financial status of the business.
The nature of these transactions makes
it humanly impossible to trust all or any of them to memory. It makes sense
therefore that proper accounting records are kept of these transactions so that
at any point in time, a reference can be made to the financial standing of the business
entity.
Cook (2007:4) opines that any
businessman who does not keep proper accounts will face unforeseen problems
such as over taxation, overdrawing of cash for personal use, inability to
control credit, inability to make profitable plans and inability to employ the
resources of the firm effectively. Therefore, an effective accounting system is
highly necessary in all entrepreneurial firms. No firm can do without an
accounting system (Cook, 2007).
Accounting system is therefore a
collection of source documents, records, procedures, management policies and
control, and data processing methods used to transform economic data into
useful information (Moscove, 2004:2). It is also defined as a set of
interrelated systems that provide financial and economic information (Potter,
2000).
Thus, accounting system is an
embodiment of the principles, methods and procedures relating to the financial transactions
of a company (Baston, 2005). With financial transactions increasing
significantly over the years, it becomes very that a well designed accounting
system developed and implemented. Smith (2006:21) stated that accounting system
plays two major roles in the firm:
1. To
carry out the routine transaction processing and record keeping required of the
accounting organization
2. To
measure and report the performance of the firm, In financial terms
Regardless of an entity's size or
type, managers and accountants should be alert to the" rudiments of
accounting systems and controls (Mattessich 2002: 14). Thus, any entrepreneur
who starts a business will discover that accounting system is absolutely essential
for the firm's growth.
For instance, records
of receivables and payables must be created for transactions with customers and
creditors, and cash disbursements and receipt must be traced to the individual
accounts. Even the small sole proprietor must have some basic records.
Cook (2007) sees accounting system as
a wise business investment. It plays a very important role in the decision
making process entrepreneurial firms. Considering the increasing complexity
confronting entrepreneurs either as a result of the size of the business unit
and the interactions and diversity of operations, one would not question the
need for an accounting system (Cook, 2007).
Entrepreneurial firms in Nigeria
therefore need to establish a sound and efficient accounting system in their
organization if they must grow and prosper. With an efficient accounting
system, entrepreneur would be able to make better decision and profitable
investment that will enhance the growth of the firm. It is against this
background that this study seeks to examine accounting system and
entrepreneurial growth in Nigeria using selected firms in Rivers State as a
survey study.
1.2 STATEMENT OF THE PROBLEM
One of the factors which have
negatively affected the growth of entrepreneurial firms in Rivers State is lack
of effective accounting system. Most of the small and medium scale firms in the
Rivers State region do not have a well designed accounting system that supplies
accurate and timely financial information required for effective planning and
decision making.
In some firms, there are no qualified
accountants who would have ensured a sound accounting practice in the
organization. In fact, many entrepreneurs in Rivers State see it as a waste of
resources employing the services of professional accountant to install and
improve the accounting system in their companies.
Most of the
accounting jobs are done by unqualified personnel who do not have any
professional knowledge in accounting. In fact, most of the "small and
medium scale firms in Rivers State still use paper-work in their record keeping
operations. Many entrepreneurs do not have automated accounting system in their
companies.
It is expected that
entrepreneurial firms in Rivers State have a well automated accounting system
that will supply accurate and timely financial information needed by
entrepreneurs/managers to make profitable investment decision that will enhance
the growth of the firm. But what is observed today is neglect of accounting
system: due to ignorance of the important role played by accounting system in
the growth of firms. It is in view to address this problem that prompted this
study.
1.3
PURPOSE OF THE STUDY
1.4
RESEARCH QUESTIONS
1.5
RESEARCH HYPOTHESES
1.6
SIGNIFICANCE OF THE STUDY
1.7
SCOPE OF THE STUDY
1.8
LIMITATION OF THE STUDY
1.9
DEFINITION OF TERMS
1.10
ORGANIZATION OF THE STUDY
REFERENCES
CHAPTER
TWO
LITERATURE
REVIEW
2.0
INTRODUCTION
This
chapter essentially deals with the review of related literature on the subject
matter under investigation.
2.1 NATURE OF SMALL AND MEDIUM SCALE ENTERPRISES
Obviously,
there are various definitions of small-scale business just as there are many
authors of the subject. There is no universally and generally acceptable
definition of small scale business. Moreover, the working definition varies
from country to country; it also varies among industrial groups and among
various financial institutions. For instance, the National Economic
Reconstruction Fund (NERFUN) (2000: 17) defines small scale enterprises as
those enterprises whose total fixed cost (excluding the cost of land) does not
more than NIO million. The Centre for Management Development (2001:5) however
defines small scale enterprise as a manufacturing, processing or service
industry employing up to 50 full-time workers, investment in plant and
machinery, but excluding land and buildings does not exceed N40 million.
Udechukwu
(2003:7) sees small scale enterprise as an industry with a labour size of
11-100 workers or a total cost of not more than N50 million, including working
capital but excluding cost of land. However, the Central Bank of Nigeria (CBN)
in its monetary policy circular No. 25 of credit guideline (2009) defines small
scale enterprise as one whose capital investment does not exceed N40 million
(excluding land but including working capital) with a labour size of between
11-35 workers:
Medium
scale enterprises as defined by the National Council of Industries (2009) refer
to medium, enterprises whose total costs excluding land is not more than two
hundred million naira (N200,000,000.00). The Central Bank of Nigeria (2008)
defined medium scale enterprises as an enterprises with total cost (including
working capital but excluding cost of land) above N40 million but not exceeding
N150 million, with a labour size of 100 staff.
Udechukwu
(2003) defines medium scale enterprise as an industry with a labour size of
between 101-300 workers or a total cost of over N50 million but not more than
N200 million, including working capital but excluding cost of land.
A
lot has been said and written about medium scale enterprises globally. It has
also formed the subject of discussions in so many seminars and workshops both
locally and internationally. In. the same token, governments at various levels
(local, state and federal levels) have in one way or the other focused on' the
small and medium enterprises.
While
some governments had formulated policies aimed at facilitating and empowering
the growth and development and performance of the SMEs, others had focused on
assisting the SMEs, others had focused on assisting the SMEs to grow through
soft loans and other fiscal incentives.
2.2 FEATURES OF SMALL AND MEDIUM SCALE ENTERPRISES
2.3
NATURE AND DEFINITION OF ACCOUNTING
2.4
IMPORTANCE OF ACCOUNTING INFORMATION
2.5
ACCOUNTING SYSTEM
2.6
OBJECTIVES OF ACCOUNTING SYSTEM
2.7 IMPORTANCE OF ACCOUNTING SYSTEM IN BUSINESS FIRMS.
2.8 MEASUREMENT CRITERIA OF EFFICIENT ACCOUNTING SYSTEM
2.9
ACCOUNTING SYSTEM AND ENTREPRENEURIAL GROWTH
REFERENCES
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.0
INTRODUCTION
In
this chapter, the researcher discusses the methods and procedure used in
collecting and analyzing the data for the study. This is necessary because it
provide a proper understanding of how the study was undertaken. The methodology
will be discussed under the following sub-headings:
·
Research design
·
Population of the study
·
Sample size determination and sampling
procedure
·
Data collection method
·
Questionnaire design
·
Operational measures of variables
·
Data analysis technique
3.1
RESEARCH DESIGN
Research
design deals with the fundamental questions of how the study subject will be
brought into the scope of the research and how. they will employed within the
research setting to yield the desired result. It is a framework or plan that is
used as a guide in collecting data for study (Nachmias and Nachmias 1976).
There are two types of research design. The experimental and the quasi
experimental research design. The quasi-experimental research design consist of
descriptive (Survey, case study, etc) and historical research (Unamma, 2003).
In
this study, the researcher adopted the quasi-experimental research design.
Here, the survey research was used to collect information from the
pre-determined sample that is a representative of the entire population.
3.2
SAMPLING/SAMPLE SIZE DETERMINATION
3.3
DATA COLLECTION METHOD
Primary
Data Source
Secondary
Data Source
Questionnaire
Design
3.4
OPERATIONAL MEASURES OF VARIABLES
3.5
RELIABILITY AND VALIDITY
3.6
DATA ANALYSIS TECHNIQUE
The
data analysis technique applied In this study were the percentage and frequency
tables, and the spearman rank order correlation coefficient which was used to
test the hypotheses.
The data were presented on tables and
values expressed in percentage. Percentage is the data analytical tool. The
technique is used because the research design demands the counting of the
number of responses for and against the research questions formulated for the
study. Pearson’s Product Moment Correlation of Co-efficient is the statistical
technique used for hypothesis testing; it is a parametric test and is
symbolized as “Rho” or “p”.
The method read observation in the
dependent and independent variable, determines whether there is association or
relationship. The formula for Pearson product moment correlation of
co-efficient is given as:
3.7.1 Model
Specification
r =
Where
N =
numbers of data variables
X = the independent variable(s)
Y =
the dependent variable
Given that:
Y = accounting system (AccSys)
X = entrepreneurial
Profitability and growth (Profit, Growth)
Thus we put
forward that entrepreneurial Profitability and growth is a function
of a good accounting system
REFERENCES
CHAPTER
FOUR
PRESENTATION
AND ANALYSIS OF DATA
4.1 INTRODUCTION
This
chapter focuses on the presentation and analysis of data. That is, the
researcher would present, manipulate and summarize the data collected in the
questionnaire to obtain answers to the research questions and hypotheses. The
result of the analysis carried out would be used to draw the necessary
inferences for the study.
4.1 DATA PRESENTATION
4.1.1. Analysis of Research Questions
4.2. DATA ANALYSIS
4.3.
TESTING OF HYPOTHESES
CHAPTER
FIVE
DISCUSSION
OF FINDINGS, CONCLUSION AND
RECOMMENDATIONS
5.1
INTRODUCTION
This
chapter is the concluding chapter of the study and it deals with the discussion
of findings, conclusion and recommendations. That is, the result of the
analysis carried out would be discussed. The conclusion would then be drawn
from the result of the analysis carried out on the entire data and the
recommendations for the study would be provided.
5.2
DISCUSSION OF FINDINGS
This
study is on the Impact of Accounting System on the Entrepreneurial Performance in
Rivers State. In the process of carrying out this study, two hypotheses were
formulated to adequately address the objectives of the study and they were
tested statistically using the Pearson Product Moment Co-Efficient of
Correlation (PPMCC). The test was carried out using Statistical Package For
Social Sciences (SPSS) Version 16.0.
From
the first hypothesis, a positive correlation was seen to exist between the
implementation of a good accounting system and profitability of entrepreneurs
in Rivers. Our analysis also indicated a positive relationship between
accounting system and business growth among entrepreneurs and small business
owners.
This
is likely as a result of the fact that the implementation of an accounting
system reduced errors inherent in accounting entries, accuracy and consistency
in records become the norm. The use of an accounting system also reduces fraud
as a good accounting system would boast of a robust checks and balances
mechanism.
The
amount of man-hour needed to complete accounting transactions is also
drastically reduced. Finally, a good accounting system also reduces the amount
of man-hours used making reference to previous transactions all these impact
positively on the performance of entrepreneurs and small business owners
5.3 CONCLUSION
5.4 RECOMMENDATION
BIBLIOGRAPHY
Baridam, D.M. (1995): Research Method
in Administrative Sciences; Port Harcourt: Paragraphics.
Baston, A. (2005), "Elements of
Accounts" (5th Ed.) New York: Prentice Hall.
Bastron (2006) Element of Accounts
(Great Britain, Cassel Ltd. 1979) p. 3.
.
Smith, R.E. (2006). Financial Accounting,
(5th Ed.), New York: John Wiley & Sons Publications.
Udechukwu, F.N. (2003), Survey of
small and Medium Scale Industries and their potentials in Nigeria . CBN
Publication, Lagos.
Unamma, A.O. (2003): 'Basic Needs for
Developmental Research - A Hint for University / Distance Learning Scientists;
Owerri: Amandera Educational Services.
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