Journal of Finance and Accounting

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Accounting Record Keeping Practices in Small and Medium Sized Enterprise’s (SME’s) in Sri Lanka

Received: 12 April 2016    Accepted: 06 May 2016    Published: 14 June 2016
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Abstract

Small and Medium Enterprises (SMEs) play vital role in many countries including Sri Lanka, because of its role for the country's economic growth. This study discovers the level of awareness towards the importance of Accounting Record Keeping Practices and its information usage in the business. The research design is based on a survey methodology using a sample of systematically selected SMEs in Gampaha District in Sri Lanka. The target population comprised of 100 SMEs operating retail shops, manufacturing firms and supplier’s of various services in Gampaha district in Sri Lanka. It was concluded that the most of the SMEs do not keep complete accounting records because lack of accounting knowledge and the cost of hiring professional accountants. As a result, there is an inefficient use of accounting information to support financial performance measurement by SMEs. This made it difficult for the entrepreneurs to calculate their business profit efficiently. Lack of keeping of accurate records was highly blamed on the lack of skills in this field by the owners or managers. The study further revealed that the owners and managers of SMEs were highly willing to learn more about how to keep accurate records of their business transactions. The results of the study also revealed that majority of the SMEs encounter problems of lack of accounting knowledge. This study recommended that that the responsible authorities should come up with an effective programme for training for SMEs entrepreneurs.

DOI 10.11648/j.jfa.20160404.14
Published in Journal of Finance and Accounting (Volume 4, Issue 4, July 2016)
Page(s) 188-193
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Accounting Practices, Accounting Information, Record Keeping, Small and Medium Enterprises (SME), Sri Lanka

References
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[3] Cooper, D. R., & Schindler, P. S. (2003). Business Research Methods (8th edition). USA: McGraw-Hill.
[4] Cooper, D. R., & Schindler, P. S. (2006). Business Research Methods (9th edition). USA: McGraw-Hill.
[5] auda, A., & Azeko, I. (2015). An Assessment of Financial Records Keeping Behaviour of Small Scale Businesses in Ghana: A Case Study of Bolgatanga Municipality, International Journal of Finance and Accounting, 4 (3), 187-194.
[6] European Commission, E. (2008). Enterprise and Industry Directorate-General: Find Report of the Expert Group: Accounting system for small enterprises - Recommendations and good practices.
[7] Germain, P. J. (2010). Top 10 Small business book keeping Tips. from http://ezinearticles.com
[8] Howard, P. (2009). Good Recording Important for Sucessful Business: Angelo State University.
[9] Ismail, N. A., & KIng, M. (2005). Firm performance and AIS alignment in Malaysian SMEs. International Journal of Accounting Information systems, 6 (4), 241-259.
[10] Keasy, K., & Short, H. (1990). The Accounting Burdens facings small firms: an emprirical research note. Journal of Accounting Business Research, 20 (80), 307-313.
[11] Maseko, N., & Manyani, O. (2011). Accounting Practices of SMEs in Zimbabwe: An Investigative study of record keeping for performance measurements - a case study of Bindura. Journal of Account and Tax, 3 (8), 171-180.
[12] McMahon, R. G. P. (1999). Putting SME financial reporting into Theoritical and Practical perspective.. In R. p. s. 98-10 (Ed.). Flinder University South Australia, Adelaide.
[13] Moore WC, Petty JW, Palich CH, Longernecker JG., 2008. Managing small business: An entrepreneurial emphasis, 14th ed.
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[15] Tucker, D., & Seluck, S. S.,. (2000). Which factors affec t entrepreneurial intentions of University Students? Journal of European Industrial Training, 33 (2), 142-159.
[16] Wichman, H. (1983). Accounting and Marketing - Key small business problems. Journal of Small Business, 7 (4), 19-26.
[17] Wichman H (1983). Accounting and marketing – key small business problems Journal of Small Businesses. Volume 7 (4): 19-26.38.
[18] Yousef, A. S. (2013) The use of accounting information by Small and Medium Enterprises: A Case study of South district of Jordan: Journal of Finance and Accounting, Volume 4 (6) 2222-2847.
[19] Zhou L., (2010). The Research on Issues and Countermeasures of Accounting Information of SMEs. International Journal of Business Management, Volume 5 (3): 223-225.
[20] Zindiye S, Roberts-Lombard M, Herbst G., 2008. An empirical investigation into the factors affecting the performance of SMEs in the manufacturing sector of Harare, Zimbabwe. Fort Hare University.
Author Information
  • Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Kelaniya, Sri Lanka

  • Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Kelaniya, Sri Lanka

  • Department of Interdisciplinary Studies, University of Moratuwa, Moratuwa, Sri Lanka

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  • APA Style

    M. W. Madurapperuma, P. M. C. Thilakerathne, I. N. Manawadu. (2016). Accounting Record Keeping Practices in Small and Medium Sized Enterprise’s (SME’s) in Sri Lanka. Journal of Finance and Accounting, 4(4), 188-193. https://doi.org/10.11648/j.jfa.20160404.14

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    ACS Style

    M. W. Madurapperuma; P. M. C. Thilakerathne; I. N. Manawadu. Accounting Record Keeping Practices in Small and Medium Sized Enterprise’s (SME’s) in Sri Lanka. J. Finance Account. 2016, 4(4), 188-193. doi: 10.11648/j.jfa.20160404.14

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    AMA Style

    M. W. Madurapperuma, P. M. C. Thilakerathne, I. N. Manawadu. Accounting Record Keeping Practices in Small and Medium Sized Enterprise’s (SME’s) in Sri Lanka. J Finance Account. 2016;4(4):188-193. doi: 10.11648/j.jfa.20160404.14

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  • @article{10.11648/j.jfa.20160404.14,
      author = {M. W. Madurapperuma and P. M. C. Thilakerathne and I. N. Manawadu},
      title = {Accounting Record Keeping Practices in Small and Medium Sized Enterprise’s (SME’s) in Sri Lanka},
      journal = {Journal of Finance and Accounting},
      volume = {4},
      number = {4},
      pages = {188-193},
      doi = {10.11648/j.jfa.20160404.14},
      url = {https://doi.org/10.11648/j.jfa.20160404.14},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.jfa.20160404.14},
      abstract = {Small and Medium Enterprises (SMEs) play vital role in many countries including Sri Lanka, because of its role for the country's economic growth. This study discovers the level of awareness towards the importance of Accounting Record Keeping Practices and its information usage in the business. The research design is based on a survey methodology using a sample of systematically selected SMEs in Gampaha District in Sri Lanka. The target population comprised of 100 SMEs operating retail shops, manufacturing firms and supplier’s of various services in Gampaha district in Sri Lanka. It was concluded that the most of the SMEs do not keep complete accounting records because lack of accounting knowledge and the cost of hiring professional accountants. As a result, there is an inefficient use of accounting information to support financial performance measurement by SMEs. This made it difficult for the entrepreneurs to calculate their business profit efficiently. Lack of keeping of accurate records was highly blamed on the lack of skills in this field by the owners or managers. The study further revealed that the owners and managers of SMEs were highly willing to learn more about how to keep accurate records of their business transactions. The results of the study also revealed that majority of the SMEs encounter problems of lack of accounting knowledge. This study recommended that that the responsible authorities should come up with an effective programme for training for SMEs entrepreneurs.},
     year = {2016}
    }
    

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    T1  - Accounting Record Keeping Practices in Small and Medium Sized Enterprise’s (SME’s) in Sri Lanka
    AU  - M. W. Madurapperuma
    AU  - P. M. C. Thilakerathne
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    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
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    AB  - Small and Medium Enterprises (SMEs) play vital role in many countries including Sri Lanka, because of its role for the country's economic growth. This study discovers the level of awareness towards the importance of Accounting Record Keeping Practices and its information usage in the business. The research design is based on a survey methodology using a sample of systematically selected SMEs in Gampaha District in Sri Lanka. The target population comprised of 100 SMEs operating retail shops, manufacturing firms and supplier’s of various services in Gampaha district in Sri Lanka. It was concluded that the most of the SMEs do not keep complete accounting records because lack of accounting knowledge and the cost of hiring professional accountants. As a result, there is an inefficient use of accounting information to support financial performance measurement by SMEs. This made it difficult for the entrepreneurs to calculate their business profit efficiently. Lack of keeping of accurate records was highly blamed on the lack of skills in this field by the owners or managers. The study further revealed that the owners and managers of SMEs were highly willing to learn more about how to keep accurate records of their business transactions. The results of the study also revealed that majority of the SMEs encounter problems of lack of accounting knowledge. This study recommended that that the responsible authorities should come up with an effective programme for training for SMEs entrepreneurs.
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