ASSESSING THE RELATIONSHIP BETWEEN ACCOUNTING AND BOOKKEEPING ON PERFORMANCE OF SMEs IN THE BUEA MUNICIPALITY
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The study sought to assess Relationship Accounting and Bookkeeping on the performance of small and medium-sized enterprises. The study was set to examine the relationship between Accounting and Bookkeeping on performance in Buea. The researcher used a descriptive and analytical research design to establish a relationship between two variables and to exhaust all areas in the research. A sample of 30 credit unions was used and sampled on a random purposive method. The questionnaire was used administered to collect data which was processed by tabulation and narrations. Data were analysed and discussed using SPSS. The study made use of the correlation coefficient because of the validity in presenting and analysing data. Also made use of the descriptive statistics to analyse the data. It has been used to this study to present data such as the distribution and retrieval of questionnaires, respondents profile and the types of accounting and bookkeeping practices applicable in carrying outperformance in Small and Medium Size Enterprises. The study also recommends that there is a need for the owners and managers of the Small and Medium-size Enterprise to embrace proper accounting records keeping practice in order to be successful and increase profitability.
The practice of record-keeping existed ages before the formal recording of history. Barbarians began to keep records by scratching them on rocks. From there crude forms of picture writing, the process of rudimentary bookkeeping began. The Italians were the leading bookkeepers and record makers for centuries. As early as 813 A.D., Bookkeepers have recognized in Italy and from these men came many of the fundamentals of the modern double-entry bookkeeping. The art of recording business transactions in a systematic manner is termed bookkeeping. It is the name given to a system, which is concerned with recording and summarizing business transactions accurately to know the true state of affairs of a business.
R.N. Carter in his book on Advanced Accounting defines bookkeeping as the science and art of correctly recording in books of accounts all those business transactions that result in the transfer of money or money’s worth.
Bookkeeping and accounting share two basic goals; to keep track of income and expenses, which improves chances of making a profit, and to collect the financial information necessary for filling various tax returns. There is no requirement that records be kept in any particular way. As long as records accurately reflect the business income and expenses, there is a requirement, however, that some businesses use a certain method of crediting their accounts; the cash method or accrual method. One can create their own ledgers and reports or rely on accounting (Williams et al 1999).
Small and medium-sized businesses benefit from the availability of accounting information, equality important is the availability of accounting that facilitates the solution or resolution of business planning, organization, and control function of the enterprises as a social organization. Most small and medium-size enterprises prefer to recruit unskilled personnel especially clerical and accounting staff. The product of these unskilled accounting has only succeeded in helping the small-scale firms to stagnate; some firms have even wound up. This is because unskilled accounting staff could not keep reliable accounting records that would stand the test of time statutory, such staff could not correctly determine the profit or loss of the firm preparing profit and loss account. This study would provide a comprehensive picture of the bookkeeping and accounting practices of SMEs. The information on SME’s accounting practices and financial performance would provide invaluable insights and inputs especially to the government in assessing whether further assistance could be provided on SMEs.
Many small and medium-sized enterprises have not given much attention to bookkeeping in relation to their business transaction despite its importance in the success of businesses. This could be a lack of sound knowledge in bookkeeping practices by owners or respective managers. There is also difficulty in ascertaining whether comprehensive accounting records that satisfied the laws under which it was incorporated had been kept. The study shows that owners or managers do has a positive attitude towards the accounting record-keeping and bookkeeping but lack adequate knowledge of the recording and also indicate that the SMEs owners faced various challenges in their record-keeping process including lack of accounting knowledge and absence of specific guidelines for bookkeeping and accounting record-keeping, fear of discouragement in case of a loss, inadequate education and training skills, and cost and time constraints. Therefore the researcher suggests that managers or owners should accurately keep the records of all their business transactions to be able to take an essential decision and made business adjustments accurately to be able to reduced operating costs and improved efficiency and productivity.
To be able to achieve the above purposes, some questions would be asked which would help the researcher to gather the necessary information needed, they are;
The main research question is;
- Is there any relationship between accounting and bookkeeping on the performance of SMEs?
The specific research questions are;
- To what extent do owners of SMEs keep records and accounting practices in their businesses?
- What is the nature of the relationship between accounting and bookkeeping on the profits of small businesses in Buea?
The main objective of the study is;
- To examine the relationship between accounting and bookkeeping on the performance of SMEs.
The specific objectives of the study are;
- To investigate the extent to which owners of SMEs keep records and accounting practices in their businesses
- To examine the nature of the relationship between accounting and bookkeeping on the profits of small businesses in Buea and;
- To make recommendations on improving bookkeeping in SMEs.