Abstract:
ABSTRACT
In developing countries like Ghana, Small and Medium Enterprises (SMEs) constitute about 90%
of all businesses and occupy a central part of the Ghanaian economy as the main driver in terms
of its contribution to income, employment generation and ultimately economic growth. However,
over the years, many SMEs have folded up shortly after their establishment due to many factors;
both environmental and internal.
Key among these factors is poor accounting and financial record keeping. The study therefore
examines the type of accounting systems used in SMEs. The study adopted a quantitative research
design with a sample size of 60 respondents. The researcher used purposive and random sampling
techniques to reduce the possibility of research limitations. The secondary data collected were
analyzed using SPSS computer software Version 16. The analyzed results are presented into
descriptive representations such as tables and percentages.
The study discovered that majority of SME operators in the Kumasi Metropolis do employ
accounting records in their operations. It also revealed that accounting records have positive effect
on the performance of SMEs. Finally, the study found out that SMEs faced major challenges in
adopting and implementing record keeping in the Kumasi Metropolis. Based on the findings the
study concludes that the inability of SME operators to use accounting records in their daily record
keeping activities leads to negative effects on their operations. The researcher therefore
recommend that for better decision making and improved performance of SMEs, the National
Board for Small Scale Industries (NBSSI) should collaborate with other benevolent NGOs to set
up training organizations to offer basic training in accounting to SMEs operators at affordable cost.
