The Impact of Record Keeping On the Performance of Selected Small and Medium Enterprises in Lagos Metropolis

Abstract

The importance of Small and Medium Enterprises (SMEs) in many economies cannot be over emphasized as they play vital roles in the economy of both developed and developing countries such as employment generation and poverty reduction among others. However, majority of SMEs have failed to recognize the importance of well-structured accounting system that would have enabled them keep accurate financial statement. The study set out to analyse the extent to which accounting information is being used to measure the financial performance of SMEs. Questionnaires were administered to 200 SMEs owners out of which 197 questionnaire were valid and analysed using Likert scale. It was observed that while respondents agree that major benefits of keeping proper records is to know the performance of the business and that record keeping is key to the success of the business, majority of the SMEs owners lack basic accounting knowledge and decry the cost involved in preparing financial statement hence they keep the records themselves manually. The study recommends that SMEs operators should endeavour to keep proper records and where necessary seek the services of SME professionals to do so at minimal cost because the cost involved in business failure as a result of lack of proper record keeping far outweigh the cost of good record keeping for a business concern.

Financial Statement Lending, Credit Information Sharing and Access to Financial Services by Small and Medium Enterprises in Kenya

“…These findings implied that majority of the commercial banks carried out financial statement lending to SMEs. The results concurred with the findings of Aladejebi and Aladimeji (2019) affirming that absence of correct financial statement makes SMEs vulnerable in securing bank loans. The business information of the SMEs was the major factor that the bank required to give a loan (Saleh, Alkasasbeh & Bader, 2017).…”

Why Does Business Zakat Contribute Insignificantly to Achieving “SDG-1: Ending Poverty” in Nigeria? Evidence from Recordkeeping Practices

“…It found the SMEs maintaining proper records of their financial transactions, which improved their financial performance significantly. Similarly, Aladejebi and Oladimeji (2019) examined the application of accounting information to assess the performance of SMEs in Lagos Metropolis, Nigeria. The data were collected through the administration of 200 questionnaires to 200 SME owners out of which 197 were returned.…”

“…Therefore, business zakat could only be fairly and correctly calculated if complete and proper records of business transactions are kept. However, a number of African studies, such as Zotorvie (2017), Pavtar (2017), Nketsiah (2018), Nyathi et al (2018) and Aladejebi and Oladimeji (2019), among others, found enterprises maintaining either improper or incomplete records. Although these studies did not evaluate the recordkeeping of zakatable assets, it can be inferred that there is a tendency to underpay enterprise zakat.…”

Effects of Record Keeping on the Growth of Small Scale Enterprises in Abeokuta South Local Government Area, Ogun State, Nigeria

“…Ademola et al [11] reported that most of the SSEs do not keep records of their business transactions, and when they do, the records are not kept properly. Without financial statements, access to loans from banks is reduced [12]. Information provided through record keeping enable managers and owners of SSEs to make business decisions.…”