ACCOUNTING SYSTEM USED IN SMALL AND MEDIUM SCALE 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 case study research design. The data collected was analysed quantitatively and qualitatively. The researcher used purposive and random sampling techniques to reduce the possibility of research limitations. The primary data collected were analyzed using Microsoft Excel. The analyzed results are presented into graphical and descriptive representations such as tables, percentages, charts and graphics. The study discovered that majority of SME operators in the Municipality do not employ accounting record keeping systems in their operations. It also revealed that accounting systems have positive effects on the operations of SMEs. Finally, the study found out that SMEs faced major challenges in adopting and implementing record keeping systems in the municipality. Based on the findings the study concludes that the inability of SME operators to use accounting record keeping systems 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.