The Impact Of Accounting Standard On The Development Of Small Scale Business In Akwa Ibom State (A Case Study Of P–Mat Table Water, Nkemba)

The Impact Of Accounting Standard On The Development Of Small Scale Business In Akwa Ibom State (A Case Study Of P–Mat Table Water, Nkemba)

Abstract

This study examined the practical impact of accounting standard on the development of small scale business in Akwa Ibom State, with particular focus on P-MAT table Water Company as the study area. The researcher used the objectives of the study to identify the problems created by non-existence of accounting records and inadequate accounting information, due to the fact that most small scale business do not obey accounting standard. To show the impact of accounting standards on small scale business, random sampling technique was used in questionnaire administration. Findings revealed that P-MAT table Water Company maintains accounting standards which is the bedrock to which it develops. The study further disclosed that the success of any small scale business depends immensely on the ability of its management to deals effectively with the present changing conditions of the business environment. It also recommends that management should adopt a good accounting system that meets with the general acceptable accounting principles which is used in identifying the advantages of accounting standards to which it brings to the development of a business.

Chapter One

Introduction

1.1 Background of the Study

A business whether small or big, simple or complex, private or public is created to provide goods and services, small scale business is part of the Nigerian history. In both developed and developing countries, the government is turning to small and medium scale industries as a catalyst for economic development and a veritable means of solving problems, it is also a seedbed of innovations and development and inventions. This can be enhanced by complying with the accounting standards set to guide business operations

Since the independence in 1960, there had been many policies by the government, governmental agencies and the private sector to promote small scale business in Nigeria. Many experts recognize marketing as a major problem and relevant solution to the growth of small scale businesses.

However, in order to achieve these goals, accounting standards or the generally accepted accounting principles (GAAP) must be applied which provides the frame work or guidelines for financial accounting.

Any business with two million naira (N2, 0000000) is regarded as “large scale business” where as in a country like Britain an Industry with an annual turnover of two million pounds sterling (£2, 000000) with few employees of 250 people is considered small scale.

This research is carried out to identifies the marketing problems of small scale business, provision and enactment of beneficial and supportive law and accounting standards

1.2 Statement of the Problem

The problem leading to the conduct of this research work is the non application of accounting guidelines in small scale businesses financial reporting. This has resulted in failure of most small scale businesses in Nigeria.

Many small scale businesses still do not consider management training essential for the growth of their businesses and financial institutions do not patronize in terms of financing of small scale industries. Absence of reliable financial data and proper record keeping make it difficult for small scale business to finance loan.

1.3 Objective of the Study

The main objective of the study is to examine the impact of accounting standards on small scale businesses with particular reference to P-MAT Table Water Company, Nkemba Street, Uyo Akwa Ibom State, other objectives includes:

1. To examine the impact of accounting standards on the development of small scale businesses in Akwa Ibom State
2. To assess the importance of accounting standard principles to small scale business
3. To find out problems created by non- existence of accounting records and inadequate accounting information
4. To ascertain the reason why qualified personnel are not engage in the small scale business
5. To make recommendation based on the findings in order to reverse the trend.

1.4 Research Questions

This study tried to seek answers to the following research questions:

1. Are there any impact of accounting standards on the development of small scale business?
2. Of what important are small scale business?
3. What roles does accounting plays on the development of small scale business in Nigeria?
4. What are the major constraint of the small scale business in Nigeria?
5. What are the benefits of accounting standards to small scale business?

1.5 Significance of the Study

This research work would serve as a yardstick for assessing the success of small scale businesses. It would also help management of P-MAT table Water, Nkemba Street, Uyo to improve on its business. The study will be relevant to other researchers, who may wish to conduct a similar research. Finally this research work will in no small way assist those interested in self employment, fresh graduates who are looking forward to having their own businesses, instead of searching for white collar jobs

1.6 Scope of the Study

The study is limited to P-MAT Table Water, Nkemba Street, Uyo Akwa Ibom State with particular reference to the impact of accounting standards on its operations.

1.7 Limitation of the Study

The said study was limited by lack of recent research data. As a researcher, time and money were also constraints.

1.8 Definition of Terms

Small Scale Business:

This is a business which is owned, managed and controlled by one or two persons, it has family influence in decision making has an un-differential organizational structure, has a relatively small share of the market and employ less than 50 employees John Cletus 2010 a researcher.

Accounting Standard:

Is a statement issued by the appropriate standard – setting body locally or internationally on a specific area or topic in financial accounting. O.I Robert (2004) Financial Accounting made simple Vol. 1-p.41

Accounting Concepts:

There are fundamental or basic rule and regulations which must be observed in preparation of the financial statement of every business organization in order to attain objectivity and fairness in the statement – Ifiokabasi E. Akpabio (2012), Simplified Book-Keeping and Accounting Vol. 1.

Cost Accounting:

This is the application of all the arts and professional competence to cost determination and analysis – Nseobong Johnathan (2011) Principles and Practice of Cost Accounting.

Book-Keeping:

This is the systematic recording of daily transactions in the appropriate books of account O.E Longe and R. A. Kazeem (1999) Essential Financial Account.

Accounting Data:

This is the information contained in a journals, ledgers and other records that support financial statements – Samuel Okon (2012).

Double Entry:

Is a system of book – keeping where by two entries are made for every transaction (debit and credit) – Lola Akintekre (1998). Comprehensive Book-keeping and Accounts.

Debit Note:

This is a document sent by the seller to the buyer to correct an understanding or when goods are not change on the invoice O.A Longe and R. A Kazeem (1999) Essential Financial Accounting .

Cash Book:

Is a book for double entry account used to record cash transactions also transaction with the bank – O. A. Longe and R. A Kazeem (1999) Essential Financial Account.

Sale Day Book:

This is a book of original entry in which credit sales are recorded before posting to the ledgers – O. A Longe and R. A Kazeem (1999) Essential Financial Account.

Purchase Day Book:

This is a book for recording goods bought on credit from the supplier and its can be referred to as purchases journal – O. A Longe and R. A Kazeem (1999) Essential Financial Account.

Petty Cash Book:

This is a book for receiving small disbursement i.e. expenses – O. A Longe and R. A Kazeem (1999) Essential Financial Account.

Business:

Organization engaged in the trade of goods and services or both to consumers- Steven M.S (2003). Economics Principles in Action P. 29.

Chapter Five

Summary, Conclusion and Recommendation

5.0 Introduction

This chapter presents the summary, conclusion and recommendations for further studies based on the findings of the study.

5.1 Summary

This study was to examine the impact of accounting standards on the development of small scale businesses in Akwa Ibom State with a particular reference to P-MAT Water Venture Limited, Nkemba. To achieve this goal, five research questions were formulated to guide this study. A structured questionnaire was used as a major instrument to gather information from the study of P-MAT Water Venture Limited, Nkemba, out of 36 copies of questionnaire sent out 30 (83%) were completely filled and returned for data analysis while 6(17%) were not returned for analysis of data.

The data collect were analysed using simple percentages and table to analysed research questions. The findings revealed that:

Accounting Standard aid on the development of small scale businesses in Akwa Ibom State. Small scale businesses are of importance to development of Nigeria

Accounting Standards play a significant role on the development of small scale businesses in Nigeria. There are problems confronting small scale business in Nigeria. There are benefits of Accounting Standards to small scale businesses in Akwa Ibom State.

5.2 Conclusion

Based on the findings of this study and subsequent recommendations, the following conclusions were made:

1. As a result of the simplicity of simple entry accounting system, small scale enterprises are more mechanize to adopt single entry accounting system
2. Due to inadequate accounting system, the small scale operators could not access their performance effectively
3. To enhance the profitability of small scale businesses and their continuity, there is need for adequate record keeping which will help the proprietors to keep tract of the performance of those enterprises.

5.3 Recommendations

Based on the findings made and conclusions drawn from the table, the following recommendations were made:

1. All business receipt should be deposited in a separate bank account with a petty cash fund established for small expenses. Also expenses paid should be supported by document that shows that the expenses were incurred for business purpose.
2. The owners should make use of the service of qualified accountant who will use his professional skills to keep proper books of account and records
3. All receipts booklets should be numbered and counter signed and monitored in order to avoid fraud
4. There should be segregation of duties for instance, the person who records the business transactions should not be the one to check the accounts.
5. The company should also train their staff in order to have a sound relationship with the customers.

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