Accounting Project Topics

The Impact of Accounting Records in Small and Medium Scale Industry (Case Study of Mr. Bigg’s and Uncle Joe’s Bakery)

The Impact of Accounting Records in Small and Medium Scale Industry (Case Study of Mr. Bigg’s and Uncle Joe’s Bakery)

The Impact of Accounting Records in Small and Medium Scale Industry (Case Study of Mr. Bigg’s and Uncle Joe’s Bakery)

Chapter One

Objective of the Study

The study obliges that we search deeply into the accounting record-keeping system of small and medium-scale enterprises (SMEs) in Enugu State Mr. Bigg’s and Uncle Joe’s Bakery,  to find out the method of keeping records problems associated with doing so, and whether the system is enough for the business. Furthermore, the study will determine the study the scope of which poor mgt has brought a setback to the progress and expansion of the organization. The study will also emphasize reasons why SMEs should keep sufficient records and want to be involved greatly in the country’s industrial change. The study also intends to marshal out a simple effective system of accounting for both small and medium scale industries. Based on the result obtained from the study appropriate recommendations will be made regarding proper books of accounts necessary to be kept by SMEs for profit maximization, and management adequacy including high growth.




This chapter synthesized the principles and concepts that have been explored and brought out by various authors in the existing literature on quality of record keeping and performance in small business enterprises.

Definition and nature of Small Scale Businesses

The definition of micro, small and medium enterprises includes all types of enterprises irrespective of their legal form (such as family enterprises, sole proprietorships or cooperatives) or whether they are formal or informal enterprises to ensure inclusiveness (Hill .T, 1987). Small business definition has no precise answer, it depends on who provides the definition (Steinhoff & Burges, 1995), varies between countries (Barrow, 1992), industries (Wabwire, 1996) and Scholars (Kashyap, 1988). It is usually basing on: number of employees, sales turnover and capital outlay, amount of capital and colored social aspects and mostly traditional enterprises (Brel, 1997).

Wabwire (1996) defines SBEs as: generally managed, operated and owned by one or two people, funds from self and/or close friends or with skill acquired both informally or with residence, joint usage of same location especially where there is similarity of the output limited geographical spread, informal nature of business and complete absence of record accounting.

Fields (1990) asserts that non wage employment is the norm in the form of self- employment, family labour and apprenticeships account for more than 80 percent while the wage employment accounts for 10 percent with the majority of workers either low skilled or unskilled.

Blunch et al., (2001) defines small business enterprises as informal traditional sector that is highly heterogeneous in terms of the types of activities and encompasses a range of sub-sectors including manufacturing, trade, services, construction and transport. Mead et al., (1996) assert that it is like an elephant: we may not quite be able to exactly characterize its true nature but once we see it we have no doubt what is in front of us.

Balunywa (2003) defined small business (specifically sole proprietor) as that characterised by single ownership, under one person’s control with unlimited liability, having undivided risk with no government control and has no separate entity from the firm. UBOS (2003) defines a small business as that employing less than five people. For purpose of this research a small business is defined as that employing less than five employees

According to De Gobbi (2003), the small scale businesses refer to small and micro enterprises that lack sufficient collateral to cover the particularly high risks involved yet they operate with high transaction costs. To her they represent the large proportion of the economic sector in every country. They sometimes operate in the informal sector since many micro entrepreneurs are illiterate and have limited access to information, they are vulnerable and neglected group commonly composed of home working women.

However, international organizations such as the World Bank and the International Finance Corporations(2002), define Small Scale Businesses as those that require small amounts of capital to establish, small number of employees or in most cases personally handled by the owner, and referred to as micro businesses hence to them they are  “mini businesses” or “Bop businesses”.

The European Union (EU) definition is based on the parameters of development, turnover and asset size and Organization for Economic Cooperation and Development (OECD) on employment and sales turnover. This implies that they play a vital role in alleviating poverty and increasing employment attributed to their promotion of competition and dynamism, since they augment government efforts in rural and urban areas thereby improving the household incomes which enables them to access various items for daily use at affordable costs. It is from this perspective that small scale businesses are dubbed as the small scale establishments since they operate at the least levels investment.

In Latin America, Small Scale Businesses are characterized by the dependence on family labor and limited technical and managerial skills. They are commonly not registered, maintain no business records and do not have access to credit from formal credit institutions. They are relatively small, flexible, require low capital needs, modest educational requirements with informal structures that are high labor intensive and do depend on local raw materials.

According to Tacy, (2004) the small scale business sector in India has been accorded as a priority sector of the national economy by the national decision makers since it is protected and promoted in various ways by government policies and measures to enhance their growth potential. Small Scale Businesses generate employment at relatively small capital costs, mobilize resources at micro levels and meet the rising demand for various goods and services required by the economy. To the decision makers, Small scale businesses constitute nearly 40% of the total output in the private sector. Much more significant was the employment generation capacity of 70%.





This chapter provided methods of research applied when collecting and analyzing data research design and sampling size, sampling procedures and design, methods of data collection, data analysis and limitations of the study. According to Katebile (2007) Methodology is defined as the technical or scientific activities, tools and procedures taken to plan gather and analyze data.

Research design

This study used a case study research design using a descriptive and analytical method. The quantitative approach were used to quantify incidences in order to describe current conditions and to assess record keeping and performance in small scale business enterprises using information gained from the questionnaires. The qualitative approach used to explain the events and describe findings using interview guide and documentary analysis. All this enabled the researcher to gain in-depth information that was used to find solutions for the research questions of the study.

 Study Population

The study population included Small business enterprises in Enugu state. The total population included all Mr Biggs and Uncle Joe’s Bakery attendants in Enugu.




This chapter contains presentation and discussion of the study as per the study objectives. To examine the availability of record keeping in small business enterprises in Nigeria, To assess the relationship between record keeping and performance in small business enterprises in Enugu state and To Identify the Challenges Faced by Small Scale Businesses in Enugu state.

During the study 60 questionnaires were distributed to small business enterprises in Enugu state and all the questionnaires were returned dully filled as required, therefore the rate of response was 100%.





This chapter focuses on the discussion, conclusions and recommendations that can be drawn from the discussion of findings presented in chapter four. The study investigated the relationship between the quality of record keeping and performance in small business enterprises.

Summary of Findings

This section focuses on the discussion of results. It highlights the implications of the findings and where appropriate, relates them to the existing literature. The section is organized according to the research questions of the study which were,

  1. Is record keeping available in small business enterprisesin Enugu state?
  2. Is there a relationship between record keeping and performance of small business enterprises?
  3. Are there Challenges Faced By small business enterprises in Enugu state?

Findings on the record keeping availability in small business enterprises in Enugu state

Many small business enterprises have poor quality of record keeping: they neither maintain the original documentation of their business activities (type of records) nor practice adequate and updated record keeping. This leaves the implementation of quality record keeping to a small number of the small business enterprises.

These findings are in agreement with empirical studies of Chen & Reinikka (1999), PSF ed. (2000), Sejjaaka (1996) and Wabwire (1996) in Uganda and PAN (1997), Stover (1997) and Syracuse (1994) elsewhere in developing countries: they concluded that there is poor quality of record keeping in small business enterprises.

The majority of employees said that record keeping is available in small business enterprises in Enugu state.

Findings on the Challenges Faced By small business enterprises in Enugu state

From the findings in table 6 it is evident that Small businesses face more problems in raising finance. Indeed, a critical look at the values of the correlations in Finding from table 6 implied that poor educational background, as majorities are un-educated.

Some sources had a stronger and significant effect on some indicators of quality record keeping and performance of small business. Mulurge (2001) Entrepreneurs lack information about modern technologies and training opportunities which concerns them while others did not even have a significant effect, Stock levels are monitored through written records or by use of computer and the business experiences low sales due to slow moving goods. Gibson and Wallsschutzky (1992).

Findings on the relationship between record keeping and performance of small business enterprises 

The quality of record keeping influences the performance in the SBEs. These findings are in conformity with Mulurge (2001) who argued that keeping of quality records is critical in determining the long-term survival of a business. In same consonance are various empirical studies: Flusche et al., (1996) and Stover (1997) that confirm that businesses that fail to maintain quality record keeping place their long term success and continuity in grave doubt. The findings of Elkan (1998a), Fasci and Valdez (1996), Liedholm and Mead (1993) and Tulip and Bitekerezo (1993) show that SBEs that stagnate at start-up size expose themselves to disadvantages of long-term liability. The FASB (1980) also asserts that financial performance and position assessment can be based on quality financial reporting.

Furthermore, the concept that quality records would prompt the closure of the business due to losses is in agreement with Gibson (1992), Gibson and Wallsschutzky (1992), McMahon (1998) who argue that many small business enterprises do not focus on record keeping as a tool for good performance but only as an assessment for future profit impediment


The following are the conclusions drawn from the findings in accordance with the objectives of the study.

The study examined the relationship between the quality of record keeping and performance of small business enterprises. The findings depicted that quality of record keeping existent in many SBEs positively influenced the overall performance of a business. Record keeping in the small business enterprises is characterized by inadequate and un-updated records. In some SBEs, there was complete absence of record keeping thus they (SBEs) based performance assessment on mental records.

Furthermore, the Challenges faced by small scale businesses where Poor Infrastructure, Financial Problems, Improper business Feasibility, Lack of Managerial Knowledge, Poor Educational Background or Lack of Education, Out-Dated Technology, Poor Marketing Strategy and Increasing Competition.

Hence, there is a relationship between the quality of record keeping and performance in the small business enterprises. Firms that do not keep proper records on the business activities are unlikely to take corrective action on their performance that may be detrimental to the long-term liability of the firm.


The following are the recommendations made in accordance with the previously reached conclusions.

Small business owner-managers should develop competencies to enhance the quality of record keeping, with specific focus on type, adequacy and updated-ness of records. It is through such records that the danger signals of poor performance can easily be detected to lead to corrective action being promptly taken, hence promoting the long-term liability of the business.

In order to promote a conducive business in the country, there is need to consult all stake holders so as to come up with an acceptable policy which boosts growth and development in the country and also promotes high spirit of small business enterprises.

The government should review the existing small scale businesses policies so as to ensure that it is appropriate to the nature and growth of small business enterprises in Uganda.

Policy makers and other stakeholders need to encourage small scale businesses to upgrade their productive assets. This can be done by enhancing the availability of the production equipment and spares in the local market and through the provision of technical services at favorable rates.

Small scale businesses need to have access to market at low transaction costs hence increasing efficiency and sales and to technical information and knowledge through networking.

It is recommended that governments at local and state levels take the necessary action to build and maintain the infrastructure. Corruption also affects many facets of the businesses environment in Uganda, therefore anti-corruption measures, such as clear regulatory structure governing public safety, infrastructure, and fiscal accountability, with actions, laws, and enforcements instituted by government, should be supported by every citizen, which will reduce the potential for bribery. For small businesses to succeed, it is essential to have a stable, enabling environment, a corruption-free society, and a supportive government.


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