ABSTRACT
This study investigated the proposed that favour this proper and adequate financial record keeping in the success of small scale business. also discussed is a documentation of the research findings carried out among merchandizing oriented small business with the aim of charging the assertion among our small business proprietors that there is no relationship between sound accounting practices and profitability in business. In began with under surveying the effects and cause of inadequate or complete lack of proper financial record among our small scale business proprietors. It also underlined the benefit of good financial record keeping. Discussed also is the extent to which simple companies maintained proper and adequate financial records. Lastly, a relationship was established between proper and adequate financial records and success of small business. Recommendation outlined a system of financial records for merchandizing oriented small scale businesses.
TABLE OF CONTENTS
CHAPTER ONE
1.1 Historical development of book-keeping
1.2 Statement of problems
1.3 Objective of the study
1.4 Significance of the study
1.5 Research hypothesis
1.6 Definition of terms
CHAPTER TWO
2.1 Concept of small scale business
2.2 Constituents of proper and adequate financial record keeping in business.
2.3 Benefit of proper and adequate financial record keeping business
2.4 Causes of inadequate record keeping in small scale business.
2.5 The task of designing financial record keeping system.
2.6 Measurement of success in small business.
2.7 Small business and auditing
CHAPTER THREE
3.1 Method and procedures
3.2 Sources of data
3.3 Research instrument
3.4 method of dta analysis
3.5 Data analysis of techniques.
CHAPTER FOUR
4.0 Data presentation and analysis
CHAPTER FIVE
5.0 Summary of findings, recommendation and conclusion
5.1 Summary of findings
5.2 Recommendations.
5.3 Conclusion
5.4 Limitation of study
CHAPTER ONE
1.0 INTRODUCTION
DEFINITION, NATURE OF BOOK-KEEP AND ACCOUNTING
Book-keeping may simply be defined as an art of recording all money transactions of an organisation so that its relationship to both its proprietor and outsider can readily be ascericuned for a particular point in time. Book-keeping cannot be easily differentiated from accounting in general. The book-keeper writer up books and keeps accounting records in a system designed by the accountant whereas the amount ant controls the book-keeping system and ares information produced to prepare financial statement and advice management and other users of financial information.
Accounting can be defined in various ways depending on the objectives which the writer wants to achieve for the purpose of this study, accounting can be defined as a process of collecting, analyzing interpreting and summarizing of information or date relating to an organisation in such a way that decision guide is made easy. It can also be defined according to the nature of the activities involved in an organisation either descriptive or analytics information obtained from the activities involved.
An on information system it collects and communicate economic information about business and organisation whse actions and decision are related to the activities being communicated. Accounting may be summarized as a machine behind the writing of an economic history and plan of an or both qualitative and financial in manner so that facts can be realized for decision making for internal and external papooses.
There have been no ascertainable record as to when book keeping and accounting developed. Many schools of thought have numerated the historical development of book – keeping and accounting record from their historical perspectives and philosophical background.
It is on record that about 850 BC the early man established the fact that there have been in existence of book-keeping and accounts. After several prove by academicians a record was discovered which reveals the book-keeping practices. Table of days were used in recording facts and events as well as business transitions.
Similarly tablets were also used in reporting on how well the business has been.
The modern accounting practice according to listo traced its origin from Egypt which indicted that precious materials like stocks of jewelsy and other precious stocks were bought and sold by early merchants of different countries which sees the facts that proper accountability is necessary in the smooth running of the business and understanding among the owners of the business.
To many Nigerians small business men, to get rich quick and short term profitability rather than sustained grwtoh, survival and long term profitability is the aim of being in business. therefore many of them cannot easily be couninced that there is a correlation between sound accounting practices and long range profitability. Even where they do, the problem does not there, because the record must be designed to suite the specific business if it is to be adequate and proper. The question is does proper book keeping effect business profitability?
This work is aimed at assessing the place of preper and adequate financial record keeping in the success of small scale businesses. The following are the objectives of this work.
1.4 SIGNIFICANCE OF STUDY
The significance of this work is highlighted on illustration case of mr Willions Ibe had not rounted the sudden change of events which had left him in total charge of retail store owned by his step – failure, Mr. Christopher Okeke who had been paralyzed by involve on Nevember 30th learning willioms totally responsible for the operation of the Okeke and Son Enterprises. Although Willions had worked in the store even since grand wation two years earlier he knew ltle about the financial anjext of the business.
Mr. Okeke had relied or Willioma deafly for the supervision of the order clerks to handle in carry shipments of goods and to help in daily bank deposits. He had kept this business affairs to himself and as far as idilliams is concerned his financial records were lawarys in his lead. Still the business provided a comfortable living for the family and Mr. Okeke had seemed to have a good business reparation in the community.
After careful search Williams located the business cheque book, complete with debts of file of unpaid bills and file of uncollected credit ships for goods sold to customers on accounts Mr. Okeke gave him the combination to office safe, in which he found cash book with lists of cash receipts and payment in chronological order a small folder containing and Mr. Okeke priced himself or preparing his own returns.
Mr. William was quite supervised at the small amount of net profit subject to tax shown on the returns.
A diligent search failed to uncover among other kind of financial report. There was no analysis that showed if the business could anticipate on inflond of cash at a alarming ration November 30 was pay day for the employees Willom did not know how much salary each of the employees earned, although he was aware that the business from the pay cheques had to be made for tax, he was not ssure how to determine the amount in desperation he counted the cheque stabs for October salaries and wrote out November cheques for the same amount. He hoped that the cash balance shown in the cheque book was correct enough so that the cheque would be paid by the bank.
Fortunately, Mrs. Okeke was asked to sign business cheques, life was naturally retcti for Willaims during the next few days. Each incoming mail brought a stock of unpaid bills. He was not were if the business had actually receives. The goods and services covered by the bill whether the prices were sight or whether the debt had been paid earlier. Several of the statements were marked faont the and on others the time period had expired for .............. a discount for prompt payment. He also received a call from the land Lord, notifying him that the monthly reat payment was fast due. William made cheques to pay the meat and the bills which seemed most request hoping that the reditions would be honest enough to refund over payments.
On December 4, William Ibe remembered with a start that Mr. Okeke was in the habit of reading out monthly statement to his credit custumers. He woundered where the file on uncollected sale tickets was complete and whether it trained item which had already been paid, would it be was to risk affording customers by reading them incorrect bills, or to fail to collect money rigidly needed by the business by not reading out any bills? With some misgiving William decided that the next alterative would be worse and he and Mrs. Okeke spet several rights preparing and addressing statement of customers accounts.
In the next few weeks more truble arose when various items of merchandize was depleted William know the store would lose many sales and income, customers will during the weeks need to fill replenishing order worse than ever, he had no idea which items Mrs. Okeke had already ordered. Mr. Okeke’s medical bills had explanted his personal bank account and were beginning to draw the business cash severally.
During this time, many customers called to ask questions about their account balances. They were usually corrections but Williams was embraced not to know whether their complaints were justified.
When the bank called late in December to report that therefore was not enough funds written on the business bank account, it was last straw for William. The cheque book and shown a balance of N12,500.13 which William had counted on to hand him over the employee’s pay day. In desperation, he called the bank manger, mr. Ibe to ask for emergency help.
Mr. Ibe, sympathetically saying that he hand already grossed the situation agreed to lead the business N17,000.00 on 60 day promissory note signed by mr. Okeke prior to visiting the bank Williams had added up the unpaid bills owned by business combined with the upcoming payroll including his own comparation, they amounted to almost N28,000.00 Mr. Ibe explained that such a large loan was impossible without the approval of the bank loan committee without supporting information about the financial position and profitability of the business, including the estimate of failure cash inflows and outflows to indicate whether the loan could be unpaid, William admitted that he could not find anything like such statements in the records of the business and that he did not know how to prepare them.
The banker recommended that William engage a firm of chartered accountants but after getting a rough estimate of what a firm of chartered accountant fee would be, Williams felt that the business could not afford this service.
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