Proceedings of 24th International Business Research Conference
12 - 13 December 2013, Planet Hollywood, Las Vegas, USA, ISBN: 978-1-922069-37-5
Financial Information System in Small-Scale Industries in India
*Vinod Kumar Yadav
The accounting system is of key importance to any firm, small or large the structure
of an effective system does not come easily. The accounting system should not be
cumbersome to the firm. Specifically, the system should be structured to provide the
needed information at a reasonable cost. Otherwise, the accounting system may be
highly sophisticated and yield intricate detail, but the process may be prohibitive.
This paper examines the nature and type of financial information system kept by
small-scale industries in India. Specifically from the owner’s/manager’s perspective,
an exploration is undertaken to see, what financial information are provided by the
accounting system to take business decisions and evaluate the firm’s performance.
The study is based on the primary data, collected through questionnaire, interview
and observations among 400 small-scale industries in India during the year 2011-12.
The present study reports on the finding from 400 small-scale industries in India and
results show that 95 per cent firms are maintaining proper books of accounts but the
in-depth analysis revealed 50 per cent owners stated that accounting reports are not
widely produced or used in their firms, primarily as they do not understand financial
information. Accountants are mainly used for taxation services, although some
owners sought more general advice. Cost reduction techniques are used by only 16
per cent small firms. Funds flow and cash flow two important statements of financial
planning are prepared just by one-fourth small-scale industries. Cost accounts are
considered useless in small firms and only 10.5 per cent small firms are maintaining
cost accounts. Income and expenditure budget is not very popular. Comparative
statements are prepared only by one-third units.
JEL Codes: M-41
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*Dr. Vinod Kumar Yadav, Deptt. Of Commerce, Maharaja Agrasen College, Universityof Delhi, India,
E-Mail: Vkyadavmac@Gmail.Com