Man has from time immemorial been
struggling indefatigably to find absolute solution to his problems.
Among this problems are economic, social, political and cultural
economic problem is the most significant.
The major problem of all
societies at all times was succinctly attempted it by fashioning crude
tools out of the locally available wood and other materials to increase
his productivity to satisfy his basic psychological needs in a large
development of any society is primary based on a solid
industrialization programme. This conception has been seriously laid
credence by the numerous powers and influence which industrialized
nation like U.S.A west Germany, Japan, USSR weld in the space of
international policies and in all other world affairs.
It is disheartening to note
that in most developing countries of the world, small scale industries
have been very often treated in economic policies, as an inevitable
background and lagging sector of the economic to be assisted merely for
social reason but not as a valid opportunity for economic development.
Consequently, upon this other perception of little attention has been
rapid to the tremendous benefits to be derived by elevating existing
small firms to attain their maximum capacity to stimulate the
establishment of new ones. The argument is not that small scale
industries are the ultimate panacea ot national development but rather
that development policies and economic planning should be based on a
neutral combination of large medium and small firms. The principal
economic importance of small scale industries is in their responsiveness
to changes and since changes is a prerequisite factor for economic
growth, it is highly desirable that more fund rather than few should be
channeled to small scale industries.
Martin O. Ijere, while
enumerating the problem of small scale industries made mention of
limited finance. This finance being the main resources small scale
industries utilize in order to exist, needs to be preserves. In doing
this, proper accounting system should be installed so as to make sure
that every item or transaction that takes place in the business
activities of small scale industries will be accounted for. This will
help in the achievement of most of the government objectives, since
small scale industries contribute in n o small way to the national
1.2 STATEMENT OF THE PROBLEM
We are aware that there are different
methods of doing one thing as there are different types of people with
different orientation. This also affect the discipline of accounting and
specifically small scale industries where opinion abound that there are
paucity of accounting records. Consequently, this study wish to address
the following problems.
v Could adequate accounting record be gotten in small scale business organization?
v Does small scale business organization adhere to legislative and standard observed in keeping accounts?
1.3 THE OBJECTIVE OF THE STUDY
It has been stated that the first step
towards profitability management of any small scale industry includes
adequate record keeping, detailed knowledge of expenses, income and
profit or loss. This can be deduced from the fact that certain
information provided by the accounting records for instance, is used in
profit planning and expenses control and the interpretation of finance
It is not unusual for a small
scale industry to have adequate sales and still fail because of
inadequate financial control. This financial control which is part of
good accounting system is vital to the success of any small scale
Small scale industries having
been described as the bedrock of economic development of Nigeria need to
keep reasonable record of their transaction. As noted by A.O Ofonagoro
“most small industries in Nigeria keep inadequate records or no record
at all of their operation.”
It therefore becomes necessary
to explore into the reasons behind this uncared for attitude of Nigeria
small scale industrialist towards keeping of accounting record or
documentation of their operation.
This study identified the
major problems of accounting procedure among small scale industries and
the causes responsible for these problem.
Finally, the study aims at
correcting the erroneous belief among small scale industrialist that
record keeping takes time than it is worth and reminds them that is the
long un the time spent in keeping adequate records actually saves time
that would otherwise be used to secure essential information required
for measuring progress, paying tax and making critical policy decision.
The result from this system will be more accurate and the efficiency and
profitability of the business will tend to increase where decisions are
based on reliable information that is available through a system of
adequate records and also to prefer possible recommendation that would
enhance the utility of accounting records kept in small business
1.4 SIGNIFICANCE OF THE STUDY
The study will be of immense benefit to a number of individual, firms and government.
v To individual, the study will serve as
a research literature to student in the department of accountancy who
may decide to research more on the topic
v To firms, it will let the small scale
industries know the proper accounting system and if this should be
maintained by them, more profit will be realized. This wills in effect,
increase the dividend distributed to the shareholders. That is increase
national income which is a feature of economic development.
v To government, the revenue of the
government will also be increased through the taxes collected on the
profit the small scale industries make. The government will also know
from this study, how it can help the small scale industries. The success
will lead to both national and economic development.
1.5 SCOPE AND LIMITATION OF THE STUDY
Poor accounting system consist of
different elements the researcher does not consider the computer
accounting system. The scope is limited to manual accounting system.
1.6 DEFINTION OF TERMS
Small scale industries
Many authorities have defined small
scale industries in various ways. For the purpose of this research, the
most recent definition given by national council of industry will be
used. It is defined as an industry whose total project cost excluding
cost of land but including working capital does not exceed #5miilion.
These are those industries engaged in
manufacturing activities through input of raw material, technical as
well as human resources to produce finished products, which are often
referred to as their output.
These are industries that engaged in
rendering serving of various types to people. Such service industries
include, tailoring industry, motor and motor cycle repairing, hair
dressing salons, dry cleaning industries
Agro based processing industries
These cover such industries as rice milling industry cassava processing, palm oil processing industries and poultry industry.
These categories of industries engaged themselves either in the production or processing of agriculture products.
Many authorities have defined accounting
in different way for the purpose of this research, the public
accountant will be used. According to the institute, accounting is “the
art of recording, classifying and summarizing in a significance manner
and in terms of money transaction and event which are, in part at least
of financial character and interpreting the result thereof”.