Abstract
Small and medium scale enterprises are gaining widespread acceptance as viable drivers of economic growth. However, several of these enterprises demise without fulfilling expectations due to poor management arising from weak accounting structure and information, and the studies of the impact of company accounts on accounting information generation are very few and not fully explored in the literature especially in Nigeria. This study therefore, examines the impact of company account on the generation of accounting information for decision making of small and medium enterprises (SMEs) in Nigeria. A survey research design approach was adopted through the administration of questionnaire to obtain primary data from respondents. The sample size of 151 respon-dents was drawn from 15 selected SMEs in Osun State. A stratified sampling technique was used to draw the sample. The data collected was analyzed using Linear Multiple Regression mode. From the results obtained, there is strong relationship between the company accounts and accounting information as indicated by the correlation coefficient of 0.955, 0.958, 0.962 and the p-value is less than 1% significant level (0.00<0.01), therefore null hypotheses are rejected. That means company accounts play significant role in generating accounting information for decision making of business organizations in Nigeria. This study finds that some SMEs operators in Osun State hired unskilled accounting personnel which make their accounting information unreliable and inadequate for effective decision making and very difficult to measure the performances of their business. This study recommends that government should promulgate new additional company law that will extend mandatory annual statutory preparation, disclosure and publication of annual accounts and reports of limited liability companies to other uncovered small and medium enterprises in Nigeria. Keywords: Accounting information, Company accounts, Small and Medium Enterprises. DOI: 10.7176/RJFA/11-11-04 Publication date: June 30th 2020
Highlights
Keeping of proper records and writing of financial statements have enormous benefits for firms (Rathnasiri, 2014)
Based on the linear equation of the predictor variables coefficients, that is: ANFO = 0.413+ 0.022b1 + 0.346b2 + 0.522b3+Ut, the equation depicted that the role of generating accounting information for decision making of small and medium enterprises (SMEs) in Nigeria is determined by 1% increase in each of the company accounts explanatory variables of income statement (IS), statement of financial position (SFP) and cash flow statement (CFS)
All the results from this study indicated that the income statement, statement of financial position and cash flow statement play significant roles in generating accounting information for measuring performance, determining financial position and decision making of SMEs in Nigeria
Summary
Keeping of proper records and writing of financial statements have enormous benefits for firms (Rathnasiri, 2014). The importance of adequate company accounts preparation is to generate information for the growth and decision making of SMEs (Onaolapo & Adegbite, 2014). It is essential to point out that the purpose of company financial accounting is to report the value of the company, and to provide enough information for others to assess the value of a company for their decision making (Abor & Biekpe, 2006). A business is the organized effort of persons utilizing resources within an organizational context to produce and distribute goods and services for the purpose of profit making (Osunwole, 2013). There are various forms of business organizations such as sole proprietorship, partnership, and limited liability company (Nigerian Accounting Standards Board (NASB), 2010). In respect of the form, some of these businesses still fall under the category of SMEs in Nigeria
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