THE RELEVANCE OF GOOD ACCOUNTING RECORD KEEPING IN SMALL BUSINESSES IN NIGERIA

THE RELEVANCE OF GOOD ACCOUNTING RECORD KEEPING IN SMALL BUSINESSES IN NIGERIA (A CASE STUDY OF GOLDEN STAR NIG. LTD)

CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY

Book keeping is a very essential part of all kind of businesses. One of the main reasons behind this is that every business is involved in financial transactions almost everyday. Book keeping is the recording of financial transactions. Transaction includes sales, purchases, income and payments by an individual or organization.

According to Davis (2012, p. 1) book keeping is the process of recording and classifying business financial information and transactions (activities). In a simple language, it is maintaining the records of the financial activities of a business or individual. Book keeping’s objective is simply to record and summarize financial transactions into usable form that provide financial information about a business.

The information recorded by the book keeping operation is to produce report for management, the owners of the business and the general public.

We all intentionally or unknowingly generate accounting ideas in a way when we plan what we will do with money. We need to plan how much will be spent whilst how much of it will be kept back. What is done through this activity is that, a budget is being prepared; Being familiar with these concepts which are universally acceptable, that money must be spent cautiously, the same is true of a business.

It is therefore imperative for business to know about the inflow and outflow of economic resources and their results. Thus, accounting is very needful in a business to provide the information which is useful for sound economic decision making process and owing to the diversification between ownership and management.

Golden stars Nigeria Limited as contained in its memorandum of association (1983, p. 1) was established and incorporated in January 1983 with an issued share capital of #500,000.00; the company was designed to float subsidiaries which operate as bakers and confectioneries, hoteliers, caterers, brewers, distillers and distributors of liquor and soft drinks.

The company headed by Mr. S. U. Ukpabio combines smoothly the art of management and set up solicit guidelines which today are part of the firm’s corporate culture to determine what business is done.

Those guidelines include:

• Strategic planning
• Careful implementation of ideas
• Step by step growth

Golden star bakery department recorded great sales turnover in 2012 and 2013 when the annual sales in both years were about #900,000 respectively. Since then, a downward trend probably caused by government fiscal measures and regulations, prominent among which was an outright ban on importation of wheat.

• STATEMENT OF THE PROBLEM

There exist some reasons why it can be a bad idea to take on your entire book keeping practices, unless you have sufficient training and knowledge, they should be left to a book keeping professional. But sometimes, small business owners may think they have everything under control, and that there is no lose ends, thus, resulting in poor financial record keeping, poor understanding of accounting system, loss of financial records, missing deadlines among others.

Accounting system is totally absent in some small scale businesses which make financial analysis and effective decision making difficult.

Poor book keeping and accounting practices have forced many small businesses out of existence. However, this research work intends to assess the importance of book keeping and accounting in small scale enterprises with a reference to Golden Star Nigeria Limited.

• OBJECTIVES OF THE STUDY

This study main objective is to empirically examine the importance of book keeping and accounting in small scale enterprises. The specific objectives of the study include;

• To assess the problems militating against good accounting record keeping in small scale businesses.
• To examine the role played by good accounting record keeping in the management of small scale businesses.
• To examine the needs and importance of good accounting record keeping in a small business.
• To identify the means of assisting small scale business owners in the existence of their business.
• To explore ways of reducing the problems influencing good accounting and record keeping in small scale businesses.

• RESEARCH QUESTIONS

The following research questions were formulated for the success of this study.

• What are the problems militating against good accounting record keeping in small scale business?
• Does good accounting and record keeping play a significant role in small scale business profitability?
• What are the needs and importance of good accounting and record keeping in a small business?
• What means can small business owners be assisted so as to enable them continue in business?
• In what ways can the problems influencing good accounting and record keeping in small scale businesses be reduced?
  • SIGNIFICANCE OF THE STUDY

This research work would be of great importance to the management of Golden Stars Nigeria Limited to appreciate the role of good accounting and record keeping