ACCOUNTING SERVICES AND FINANCIAL PERFORMANCE OF SMALL AND MEDIUM ENTERPRISE IN NIGERIA (A CASE STUDY OF RIVERS STATE)
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- NGN 3000
Background of the study
Accounting services are very pertinent in ascertaining the profitability, financial position and tax liability of business organizations. It utilizes contemporary techniques, for example, monetary explanations and bookkeeping programming or by utilization of customary strategy which is fundamentally stewardship bookkeeping. Bookkeeping forms are implanted in each business, that is, each business needs bookkeeping administrations since they profit and it has regularly been alluded toas' the dialect of organizations'. Experts in Accounting are frequently observed as obvious makers of significant worth in associations. This is vital for extraordinary execution. The bookkeeping bureau of an association can gauge the productivity, effectiveness and budgetary position of the organization by handling the money related records of the organization. They additionally help detail money related techniques for the business associations as a result of the information of the budgetary drivers and they likewise look for open doors for long haul achievement (Association of Certified Chartered Accountants, 2013). Be that as it may, most examinations have been done on enormous organizations and ventures and they neglect to investigate the activities of Small and Medium Scale Enterprises (SMEs). SMEs' level of execution and viability should be examined. It is accepted, some of the time that the bookkeeping needs of Small and Medium Enterprises are only to record purposes yet it is more than that. The Accounting administrations are foremost a direct result of the apropos needs of the partners and the business. When SMEs begin their tasks, their money related capacities are worked to ensure that there is consistence with the significant bookkeeping guidelines and standards. As the business develops, the bookkeeping capacities windup institutionalized and the business procedure ends up less demanding to screen then from that point the bookkeeping capacity starts to achieve its potential. It is likewise essential to observe the issuance of newguidelines known as International Financial Reporting Standards and it is additionally fundamental for organizations to report their money related position as per the norms. In any case, this isn't the situation as the information of these guidelines isn't controlled by a great deal of people. This study primarily centers on the roles of accounting services and how it affects the performance of SMEs in Nigeria as it is shown that SMEs are very important to the economy
1.2 Statement of the problem
The research problem is that the scope is limited. This is as a result of limited time for the research. Hence, accessibility to more SMEs is not possible. The problem areas that stimulated interest in this research topic are the low performance, inefficiency and the convergence to IFRS that is associated with SMEs. These issues are discussed more concisely below: SMEs are crucial to the development of the market economy. SMEs are sometimes referred to as essential participants in the development of local and regional areas.
Despite government institutional and policies support to enhancing the capacity of small and medium scale enterprises, small and medium scale enterprises has fallen short of expectations (Fatai, 2015). They also have an important role to play in the economy of our countries and even the world. This is a major reason why accounting information is necessary. It provides necessary information to monitor the development of the SMEs. They are the backbone of economies in countries all around the world. SMEs are an important drive for economic development and empowerment of local communities (Tambunan, 2014). They cut across a variety of fields such as trade, agriculture and processing, mining, service, among others. SMEs usually employ bookkeepers instead of accountants which gives room for ineffectiveness (Mutua, 2015). This is the foundational problem because bookkeepers do not have as much knowledge as the accountant and the basis for judging performance is already marred. There is also the challenge if the issuance of standards. Lately, at the international level, the accounting has been submitted to a comprehensive process of convergence and reconfiguration, which aims to eliminate the disagreements between different accounting systems (Sava, 2013). Most accountants do not have the knowledge of it and this affects the financial reports. This is because without the knowledge of it, the financial reports would not be up to standard and the objective of the issuance of IFRS is defeated. According to International Accounting Standards Board (2009), small and medium- sized entities are characterized as not having open responsibility and by distributing broadly useful money related articulations for outside clients.
1.3 Objective of the study
The primary objective of this study is to examine accounting services and financial performance of small and medium enterprise in Rivers state. Other specific objectives are:
- Assess the effect of accounting practices on SMEs performance in Rivers state.
- Evaluate the mode of accounting on efficiency of SMEs performance in Rivers state.
1.4 Research hypotheses
The following null hypotheses are tested in this study:
H01: There is no significant relationship between accounting practices and SMEs performance in Rivers state
H02: There is no significant relationship between mode of accounting and SMEs performance in Rivers state
1.5 Significance of the study
This study on accounting services and financial performance of small and medium enterprise in Rivers state will be very important to business owners, managers, and also employees. This is because every business both small and medium all makes use of money to carry out their transactions. This therefore necessitates the need for the carrying out of accounting services. This study will help stakeholders to understand the importance of accounting services and how it affects the performance and profitability of the enterprises. This study will also serve as a reference piece to students, researchers and scholars who may wish to carry out further research on this topic or related domain in the future.
1.6 Scope of the study
This study focuses on assessing accounting services and financial performance of small and medium enterprise in Rivers state. Hence, this study shall be delimited to small and medium enterprise in Port Harcourt, Rivers state.
1.7 Limitation of the study
Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint are:
Time: The researcher encountered time constraint as the researcher had to carry out this research along side other academic activities such as attending lectures and other educational activities required of her.
Finance: The researcher incurred more financial expenses in carrying out this study such as typesetting, printing, sourcing for relevant materials, literature, or information and in the data collection process.
Availability of Materials: The researcher encountered challenges in sourcing for literature in this study. The scarcity of literature on the subject due to the nature of the discourse was a limitation to this study.
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