THE IMPACT OF COST ACCOUNTING PRACTICES ON THE PERFORMANCE OF SMES IN NIGERIA

Complete Material Cost #3,000Howdy, dumka

Order for Complete Material now

ABSTRACT

The purpose of this study is to examine the impact of cost accounting practices on the performance of SMEs in Nigeria. To achieve the objectives of the study, the researcher took extensive review on related literature, and utilized the Bourley and Yaro-Yemen’s sampling technique to determine the sample size. Out of which a sample size of 30 respondents from the population of 50 respondents in selected SMEs in Nigeria. Out of the 30 copies of questionnaire distributed 20 were retrieved. Simple percentage and frequency distribution tables were used to analyze the data. The research was guided by one (1) hypothesis, this hypothesis were formulated and tested, using the Pearson moment correlation coefficient statistical tool. It was found that Cost accounting practices design reward strategies for executives and shareholders. Cost accounting practices part of management, which requires the identification, generation, presentation, interpretation and use of relevant information. Cost accounting, inform strategic decisions and formulate business strategy. There are challenges of fail cost accounting particular performance of SMES in Nigeria such as Lack of proper accounting particular, Lack of integrity, Classification of costs, Delay in Reporting and Overloading of information. Base on the findings, it was recommended that traditional and financially oriented cost accounting practices have high level of usage but the adoption of newly-developed management accounting practices remains patchy. Perhaps Nigeria policy makers could provide training in these techniques for entrepreneurs or future graduates in Nigeria.

 

CHAPTER ONE

INTRODUCTION

1.1   BACKROUND OF THE STUDY

Many new business owners are daunted by the mere idea of book-keeping and cost accounting practice. But in reality, both are pretty simple. It is important to note that book-keeping and cost accounting practices share two basic goals: to keep track of income and expenses, which improve chance of making profit, and to collect the financial information necessary of filling various tax returns. There is no requirement that records be kept in any particular way. As long as records accurately reflect the business’s income and expenses, there is a requirement.

However, some business organizations use certain method in crediting their accounts. The cash method or accrual method depending on the size of the organizations and amount of sales, one can create own ledgers and report, or rely on accounting. Williams (1999).

An accounting system records, retains and reproduce financial information relating to financial transaction flows and financial position. Financial transaction flows encompass primarily, flows on account of expenses. Element of financial position, including property, money received or money spent are assign to one of the primary groups, that is assets, liabilities and equity.

With these primarily groups each distinctive assets, liability, income and expenses is represented by respective account. An account is simply a record of financial inflows and outflows in relation to the respective assets. Since they represent only the inflows and outflows absorbed in the financial position elements on completion of the period. Williams (2008).

Impact of cost account practices, is a function of the benefit that are derived by the members of the society who bind themselves into the social organization of their survival and want satisfaction quest. Anyigbo (1999).

Thus accounting practices show the books, record, vouchers and files and related supporting data resulting from the application of the accounting process. It involves the design of documents and transaction flow through an organization. The uniqueness of small and medium scale enterprises are a vast majority of business found in Varity of primary and intermediate production of the economy.

These establishments have tremendous impact on the stale and well being of the nation in employment generation as source of national outputs and revenues, providing fixed stock for large corporation they may lack the sophistication to apply the detailed accounting practices processes, yet the value of accounting practices to these organizations is quite profound.

1.2   STATEMENT OF PROBLEM

A number of small and medium scale enterprises have not given much attention to accounting practices in relations to their business transaction, despite its importance in the success of business. This could be as result of lack of sound knowledge in accounting practices by owners or respective managers. Also, there is difficulty in ascertaining whether comprehensive accounting records satisfied by law under which it was incorporated had been kept. Another challenge also is to determine the extent of adherence to laid down accounting practices as constituted in the wheel of implementation of good accounting practices. Finally, low educational background of owners and the employment of unskilled accounting staff had attested the production of realistic and reliable accounting or financial statement.

1.3   OBJECTIVE OF THE STUDY

The aim of this study is to examine the impact of cost accounting practices on the performance of small and medium scale enterprises in Nigeria. Other specified objectives are;

  1. To determine the extent to which sound accounting practices is carried out among small and medium scale enterprises in Nigeria.
  2. To evaluate the extent of compliance of small and medium scale enterprises with standard accounting practices.
  3. To analyze the relationship between accounting practices and SMEs performance in Nigeria.
  4. To access how accounting skill influence small and medium enterprises firms.

1.4   RESEARCH QUESTION

The following questions are formulated to guide this study;

  1. To what extent is the sound accounting practices carried out among small and medium scale enterprises in Nigeria?
  2. What are the extent of compliance of small and medium scale enterprises with standard accounting practices performance in Nigeria?
  3. What are the relationship that exists between accounting practices and small and medium scale performance in Nigeria?
  4. How does the accounting practice influence small and medium scale enterprises performance in Nigeria?

1.5   RESEARCH HYPOTHESIS

The following hypotheses are formulated to guide this study.

HO1: Cost accounting practices has no significance impact on the performance of small and medium scale enterprises in Nigeria.

HO2: There is no significant relationship between cost accounting practices on the performance of small and medium scale enterprise in Nigeria.

1.6   SIGNIFICANCE OF THE STUDY

This study will be beneficial to the accounting practitioners and policy makers as it will help them to indentify the policies that will encourage the profession.

It will also help the government to put more effort in ensuring a successful accounting practices policies.

It will also serve as an additional literature that will be useful for future research for potential and present students of the accounting department.

1.7   SCOPE OF THE STUDY

This study is basically concern with the impact of cost accounting practices on the performance of small and medium scale enterprises in Nigeria.

It is therefore limited to only small and medium scale enterprise in Nigeria.

1.8   LIMITATION OF THE STUDY

This study is hindered by the following factors: Time, Finance and Materials.

The time expected to complete this study is too short. Also the finance estimated to carryout the study is not enough.

Finally, the materials needed to carryout the study are limited. All this make it difficult for the research to be carried out an in-depth research on the study.

1.9   DEFINITION OF TERMS

ACCOUNTING: The process of indentifying, measuring, recording and communicating economic transaction. Measuring is normally made in monetary terms and the accountant will prepare record in the form of financial statement.

COST ACCOUNTING: This is that part of management accounting which establishes budgets and standard cost and actual cost of operations, procedures, departments or products and the analysis of variances, profitability or social use of fund.

ENTERPRISES: This is an organization such as government or private owned entity that provides goods and services to the public either for free or to maximize profit.

FINANCE: The capital involved in a project especially the capital that has to be raised to start a new business and it is also a loan of money for a particular purpose, especially a finance house.

SMALL SCALE ENTERPRISE: These are businesses that are not large in degree or size.

 

LARGE SCALE ENTERPRISES: These are businesses that are large in degree or size.

 

Complete Material Cost #3,000

Order for Complete Material now