Accounting is the language of business that can tell with reasonable accuracy the degree of success an organization has achieved in approaching its financial goal of profit. Accounting system can be defined as records, procedures and equipment that routinely deal with the events affecting the financial performance and position of the organization, (Horngren and Foster, 1975). The accounting system entails repetitive voluminous transaction which generally falls into cash disbursement, cash receipts, purchases and sales, services including employee payroll. The purpose of accounting system is to provide an orderly method of gathering and organizing information about the various business transaction so that it may be used as an aid to management in operating the business (cope land and Dascher, 1978). Small scale enterprises have been defined in various ways according to the capital of the enterprises, size, the number of people employed by the enterprises, the ownership and management of the enterprises and sale volume. Small scale enterprise according to Omorodion (1987) are very important to nations. They are catalysts for industrialization. This is because they provide raw materials for medium and large scale enterprise. They also provide employment opportunities for large segments of the population. For the small scale enterprise to efficiently play the mentioned roles they should be an orderly method for gathering and organizing information about the various business transaction. This can only be done by the use adequate accounting system.
Basically, they are two types of accounting system commonly in use, namely, single entry and double entry system. These could be operated manually or computerized (Baumback, 1983).
The single entry accounting system according to Osuala (1995) is the easiest accounting system to operate. The system recorded the flow of income and expenses through the business on daily summary of cash receipts, a monthly summary of cash disbursement. In single entry book-keeping there might be single aspects of certain transactions and no record at all of some. Generally, there are rough records of cash received and paid and of sundry debtors and creditors. Transactions are exchange of values. For every value received, there is an equal value parted with. It is obvious therefore, that a transaction has a double effect. Receiving of value and giving out value. This method is known as double entry book. Keeping method, double entry book keeping according to Passion (1989) does not mean recording twice but instead, it means that every entry recording twice but instead, it means that every entry or recording of transaction has two parts, a left side and a right side. The left side in the accountant’s language is a debit and the right side, a credit when applied to a transaction. The value received is a debit and the value parted with a credit. Whereas considerable amount of studies have been conducted on financial and management of small enterprises. Osuala (1993) reported that generally many of these enterprises recorded their transaction randomly without adherence to any established systems of accounting, hence, there is deficiently in keeping tract of the cash flow in the enterprises. Mitchel et al (2000) argued that accounting information could help the small scale enterprises manage short term problems in such areas as costing, expenditure and cash flow by providing information to support monitoring and control knowledge cash flow according to Pandy (1991) is very important because cash flows are inseperable parts of the business operation of all firms. Paren and Grant (2000) noted that decision making processes in small scale enterprises are more sophisticated than anticipated but they lacked effective accounting information and control system to support their decision. Furthermore, the international federation of Accountants (2006) reported that there is evidence to suggest that small firms are aware of the importance of accounting information. Inspite of this awareness most proprietors of small enterprises in Nigeria most times are not too keen to use standard accounting system to run the day to day activities of their enterprises. (Ofonagoro, 1983), the high rate of failure of small scale enterprises in developing countries like Nigeria, has generally been traced to poor management and accounting system employed by these enterprises. The purpose for these study, therefore was to identify the accounting system in use in small scale enterprise in Enugu, South East Nigeria with a view to determine adequacy of such system(s) and recommend remedies needed for enhancement of accounting information system in optimization of the operation of these enterprises.
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OTHER SIMILAR ACCOUNTING PROJECTS AND MATERIALS