Influence of Accounting Records on Performance of Small and Medium Enterprises in Malaysia

Abstract

Accounting is crucial to business management. Thus, the study sought to examine the influence of accounting records on the performance of small and medium enterprises in Malaysia. The study adopted the descriptive research design. The target population consisted of SME owners based in Johor Bahru, Malaysia. The target population was 850 participants. The data gathering tools consisted of questionnaires. The study results showed that accounting records was found to be satisfactory in explaining the performance and can explain 40.1% of the variations in the performance of SMEs. It was found that accounting records is positively and significantly related to performance (β=.2154, p=0.008). The study concluded that accounting records positively influence the performance of small and medium enterprises in Malaysia. Accounting records keeping are crucial for decision making and similarly assists in improving business performance and productivity for reliable business performance. Increasing accounting records leads to a considerable benefit that will accrue to an entity as a whole in the long run as it will lead to increased processing power, timely generation of reports and general reduction of associated operating costs. The research recommended that SMEs should ensure they use accounting records regularly. SME owners should ensure that proper and specific organizational documents are kept since they are vital for decision making. SME owners should embrace appropriate accounting records keeping techniques to attain success in their financial performance. It is suggested that the cost of operating a sound accounting system must be reduced to motivate its adoption in businesses. Extra efforts must be allocated to accounting records for the effective performance of businesses. Keywords: Accounting Records, Performance, Small and Medium Enterprises, Malaysia