THE PERCEPTION OF ACCOUNTING LITERACY ON PROFITABILITY OF SMALL AND MEDIUM ENTERPRISES (A CASE STUDY OF SELECTED SMEs IN KUMASI METROPOLIS)

Abstract

This research is on the perception of accounting literacy on the profitability of Small and Medium Enterprises. The study looks at the problems faced by Small and Medium Enterprises and the need for proper bookkeeping and basic accounting procedures in Small and Medium Enterprises. Small and Medium Enterprises are unable to monitor their operations which can eventually result in loss of track on various transactions, loss of properties such as records on its tangible assets. The research is a descriptive in nature involving qualitative and quantitative methods which administered through questionnaires. Primary data was obtained from respondents through questionnaires, and secondary data was obtained from text books, magazines, brochures, internet and journals. Data analysis was carried out using frequency distribution tables, charts and percentages.

The total sample comprised of 222 respondents from Adum, Kejetia, Bantama and Asafo business areas. Simple Random sampling was used whereby the researchers went to these business areas and administered questionnaires to the sampled. The study found that about 57.3% SMEs in Kumasi Metropolis have nothing to do with accounting literacy, the reason being that SMEs owners do not adopt means of recording their accounts and believe it exposes their financial position. The researchers recommended that owners should be educated to keep away their personal transactions from their business entities and also the National Board for Small Scale Industries should be strengthened and resourced to solve these numerous problems of the small and medium enterprises.

It is in line with this that the study identifies the perception of accounting literacy on profitability of small and medium enterprises and challenges of these SMEs and came out with ways and means, which will establish and sustain the growth of SMEs.