A PROJECT WORK ON THE TOPIC: EFFECT OF ACCOUNTING PRACTICES AND BOOK KEEPING ON THE PERFORMANCE OF SMALE AND MEDIUM ENTERPRISES IN GHANA, A CASE STUDY IN KUMASI METROPOLIS

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.