RUAHA CATHOLIC UNIVERSITY
RUCU
ASSESSMENT OF THE CONTRIBUTION OF ACCOUNTING RECORDS ON
THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN
TANZANIA, A CASE STUDY OF IRINGA MUNICIPALITY
BY
JANEPHER MALIWA
JULY, 2018
RUAHA CATHOLIC UNIVERSITY
RUCU
ASSESSMENT OF THE CONTRIBUTION OF ACCOUNTING RECORDS ON
THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN
TANZANIA, A CASE STUDY OF IRINGA MUNICIPALITY
BY
JANEPHER MALIWA
REG: 213/BAFIT/T/2015
A Dissertation Submitted To the Faculty of Business and Management Sciences in
Partial Fulfillment of the Requirements for Award of “Bachelor Degree of
Accounting and Finance with Information Technology” at Ruaha Catholic
University – Iringa, Tanzania
JULY, 2018
i
DECLARATION
I, Jenifer Maliwa, declare that A Research report entitled “Assessment of the
contribution of accounting records on the performance of Small and Medium Enterprises
in Tanzania, a case study of Iringa Municipality” is my original work and has not been
submitted and will not be presented to any college, institution or university other than
the Ruaha Catholic University for academic credit.
SIGNATURE ___________________
DATE_____________________
Janepher Maliwa (Reg.No /BAFIT/T/2015)
ii
CERTIFICATION
I, the undersigned to certify I have read and here by recommend for acceptance by the
Ruaha Catholic University in Iringa, Tanzania the dissertation entitled “Assessment of
the contribution of accounting records on the performance of Small and Medium
Enterprises in Tanzania, a case study of Iringa Municipality” In fulfillment of the
requirements for the award of Degree Of Business Accounting and Finance with
Information Technology.
Name
Mr. J. Mtindya
(Supervisor)
Signature: ____________________________Date:________________________
iii
COPYRIGHT
This is a copyright material protected under the Berne Convention, the Copyright Act
2002 and other National and International enactments, in that behalf, on intellectual
property. Therefore, no part of this thesis may be reproduced, stored in any retrieval
system, or transmitted in any form by any means, electronic, mechanical, photocopying,
recording or otherwise without prior written permission of the author or Ruaha Catholic
University ( RUCU ) in that behalf.
iv
ACKNOWLEDGEMENT
Firstly, I would like to thank the Almighty God for giving me a healthy life, potentials
and opportunity to be at University for without God I would have not reached where I
am now, glory and honor be into Him.
Secondly, I would like to thank God for my family. I humbly appreciate for their kind
contributions they made to me during my studies, paying the school fees and personal
expenses which were needed to make the completion of my education successfully.
Thanks and honor is to my supervisor Mr. Mtindya, for his close supervision, and
directives which was very important to me when I was doing my study. He also gave me
advice and challenging assistance that contributed a lot to the completion of this study.
I am also indebted to Solvason James whose close assistance, constant encouragement,
suggestions, guidance and constructive criticism contributed towards the successful
completion of the study.
v
DEDICATION
This piece of work is dedicated to my late father Nicholas Maliwa. What a great job you did
for me! Who laid down the foundation of my education with a lot of sacrifices. May your
souls rest in peace, Amen! It also dedicated to my mother for moral, material support and
encouragement during my studies. May the Almighty God bless you.
vi
ABSTRACT
This research has been conducted at Iringa Municipality to investigate the contribution
of accounting records on the performance of Small and Medium Enterprises in Tanzania.
Most SMEs do not progress well due to various constraints, one of them being poor
accounting records. Accurate accounting records enable the business to manage its
finances and make good financial decisions which in turn improves the performance of
the business.
Data were collected through questionnaires as well as reviewing other secondary sources
including reports, memos and charters. Findings were processed through SPSS data
analysis programme for their interpretation and analysis so as to answer three specific
research questions: (i) to what extent do proper accounting records improve the
performance of SMEs? (ii) To what extent SMEs perform in preparation of accounting
records? And (iii) to what extent the proper accounting records procedures improve the
performance of SMEs?
The findings show that most of SMEs acknowledge that proper accounting record brings
the improvement in business and set of procedures help to minimize record keeping cost
and it develop a proper record keeping also Entrepreneurship seminars helps to elaborate
on how to keeping records effective
There is need to carry out a study of this kind but targeting the medium entities only.
Given that the need for accurate account recordkeeping increases with the expansion of
growth in size of a business there is a need to find out how the medium enterprises are
performing in terms of the recordkeeping
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TABLE OF CONTENTS
DECLARATION..............................................................................................................ii
CERTIFICATION ..........................................................................................................iii
COPYRIGHT ..................................................................................................................iv
ACKNOWLEDGEMENT...............................................................................................v
DEDICATION.................................................................................................................vi
ABSTRACT....................................................................................................................vii
TABLE OF CONTENTS .............................................................................................viii
LIST OF TABLES ..........................................................................................................xi
LIST OF FIGURES .......................................................................................................xii
LIST OF ABBREVIATION AND SYMBOLS ..........................................................xiii
CHAPTER ONE ..............................................................................................................1
INTRODUCTION AND BACKGROUND OF THE STUDY .....................................1
1.1 Introduction..................................................................................................................1
1.2 Background of the Study .............................................................................................1
1.3 Statement of the Problem.............................................................................................5
1.4 Objectives of the Study ................................................................................................6
1.4.1 General Objective .....................................................................................................7
1.4.2 Specific Objective .....................................................................................................7
1.5 Research Question .......................................................................................................7
1.6 Hypothesis of the Study ...............................................................................................7
1.7 Significance of the Study .............................................................................................8
1.7.1 Enterprises.................................................................................................................8
1.7.2 Ruaha Catholic University ........................................................................................8
1.7.3 Government of Tanzania...........................................................................................8
1.7.4 Researcher and Academicians ..................................................................................8
1.8 Scope of the study ........................................................................................................8
1.9 Limitation of study.......................................................................................................9
1.10 Definition of Key Terms ............................................................................................9
1.10.1 Accounting Records................................................................................................9
1.10.2 Performance ............................................................................................................9
1.11 Organization of the Study ........................................................................................10
CHAPTER TWO ...........................................................................................................11
LITERATURE REVIEW .............................................................................................11
viii
2.2 Theoretical Literature Review ...................................................................................11
2.2.1 Decision Usefulness Theory ...................................................................................11
2.2.2 Origin of the decision usefulness theory.................................................................11
2.2.3 Positive Accounting Theory (PAT) ........................................................................12
2.3 Empirical Literature Review......................................................................................13
2.3.1 Proper accounting records.......................................................................................13
2.3.2 Accounting record to the Small and Medium Enterprises performance .................14
2.4 Research gap ..............................................................................................................19
2.5 Conceptual Framework ..............................................................................................20
2.6 Definition of variables ...............................................................................................21
2.6.1 Accounting records .................................................................................................21
2.6.2 Preparation of accounting records...........................................................................21
2.6.3 Accounting records procedures...............................................................................21
2.6.4 SMEs performance..................................................................................................21
CHAPTER THREE .......................................................................................................23
RESEARCH METHODOLOGY .................................................................................23
3.1 Introduction................................................................................................................23
3.2 Area of the Study .......................................................................................................23
3.3 Research Approaches.................................................................................................23
3.4 Research Design and Technique ................................................................................24
3.5 Sampling Design ........................................................................................................24
3.5.1 Population and target population ............................................................................24
3.5.3Sampling technique..................................................................................................25
3.5.4 Sample size .............................................................................................................26
3.6 Data types...................................................................................................................27
3.6.1 Primary Data ...........................................................................................................27
3.7 Data Collection Methods ...........................................................................................27
3.7.1
Questionnaire ....................................................................................................27
3.8 Data analysis Methods ...............................................................................................28
3.9 Reliability and Validity of data..................................................................................28
3.10 Ethical Considerations .............................................................................................29
CHAPTER FOUR..........................................................................................................31
DATA ANALYSIS, INTERPRETATION AND DISCUSSION ...............................31
4.1 Introduction................................................................................................................31
4.2. Demographic Information.........................................................................................31
4.3 Test of Reliability and Validity..................................................................................33
4.3.1 Reliability................................................................................................................33
4.3.2 Validity ...................................................................................................................33
4.4 Finding in relation to Objectives................................................................................34
4.4.1 Proper Accounting Records ....................................................................................35
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4.4.2 Preparation of accounting records...........................................................................36
4.4.3 Proper accounting record procedures......................................................................37
4.5 Test of Hypothesis .....................................................................................................38
4.5.1 Correlation.............................................................................................................38
4.5.2 Regression Analysis ..............................................................................................39
4.6. Discussion of Findings..............................................................................................42
4.7 Chapter Summary ......................................................................................................44
CHAPTER FIVE ...........................................................................................................45
SUMMARY, CONCLUSION AND RECOMMENDATIONS..................................45
5.1 Introduction................................................................................................................45
5.2. Summary ...................................................................................................................45
5.2.1 General Summary ...................................................................................................45
5.2.2
Summary of Findings ........................................................................................45
5.3 Implication of Findings..............................................................................................47
5.3.1 SMEs.......................................................................................................................47
5.3.2 Policy Makers .........................................................................................................47
5.3.3 Learning institutions ...............................................................................................47
5.3.4 Business Owners .....................................................................................................48
5.4 Limitations of the Study.............................................................................................48
5.5 Conclusion .................................................................................................................48
5.6 Recommendation .......................................................................................................49
5.6.1 Recommendations for Action .................................................................................49
5.6.2 Recommendations for Future Research ..................................................................49
REFERENCES...............................................................................................................50
APPENDICES ................................................................................................................53
APPENDIX 1: LETTER FOR DATA COLLECTION...................................................53
APPENDIX II: QUESTIONNAIRE................................................................................54
PART A: DEMOGRAPHIC INFORMATION (Tick the appropriate answer)...............54
PART B: SPECIF QUESTIONS .....................................................................................55
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LIST OF TABLES
Table 3.1: The Targeted Sample Size ………………………………………………….27
Table 4.1: Demographic Information ..............................................................................34
Table 4.2: Reliability Statistics ........................................................................................36
Table 4.3: KMO and Bartlett's Test .................................................................................37
Table 4.4: Proper Accounting Records ............................................................................38
Table 4.5: Preparation of accounting records ..................................................................39
Table 4.6: Proper accounting record procedures .............................................................40
Table 4.7: Correlations.....................................................................................................42
Table 4.9: Model Summary .............................................................................................43
Table 4.10: ANOVA ........................................................................................................44
Table 4.11: Coefficientsa ..................................................................................................44
xi
LIST OF FIGURES
Figure 2.1: Conceptual Framework ........................... Error! Bookmark not defined.
xii
LIST OF ABBREVIATION AND SYMBOLS
ACCA
Association of Chartered Certified Accountants
CPA
Certified Public Accountant
FRSSE
Financial Reporting Standard for Small Enterprises
GDP
Gross Domestic Product
IASB
International Accounting Standards Board
SACCOS
Saving and Credit Corporate Society
SIDO
Small Industries Development Organization
SMEs
Small and Medium Enterprises
SPSS
Statistical Package for Social Science
RUCU
Ruaha Catholic University
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CHAPTER ONE
INTRODUCTION AND BACKGROUND OF THE STUDY
1.1 Introduction.
This chapter highlighted the main reasons for the study. It also gives the background to
the research problem, statement of the problem, research objectives, research questions,
and significance of the study. In addition to that, the chapter covers scope of the study
and the definition of the key terms as well as organization of the study. Most SMEs do
not progress well due to various constraints, one of them being poor accounting records.
Accurate accounting records enable the business to manage its finances and make good
financial decisions which in turn improves the performance of the business. The purpose
of this research is to assess the contribution of the accounting record to the performance
of small and medium enterprises in Tanzania, a case study of Iringa Municipality.
1.2 Background of the Study
Accounting records
The history of accounting records is thousands of years old and can be traced to ancient
civilization. Accounting records Is a system of book keeping so named because every
entry to an account requires a corresponding and opposite entry to a different account.
(lucapacioli, 1992).
Accounting records keeping is a set of components that collects, records, classifies,
analyses, and processes and summarizes business transactions in the books of accounts.
A system should be simple to use, easy to understand, reliable, accurate consistent and
designed to provide information on a timely basis (Romney, 2003). Good record
management helps in controlling the creation and growth of records to reduce operating
costs, assimilation of new records management technologies and in ensuring regulatory
1
compliance also good accounting record enables the business organization to plan
properly and also check for misappropriations of recourses of the organization. The
keeping proper book of accounts is essential to the growth and survival of the business.
In order to ensure efficiency, effectiveness and continuing survival of business
organization, management must seek for reliable, relevant, accurate and timely financial
information for planning and decision making. (Edun, 2013). Poor record keeping make
it difficult to differentiate between business transaction and personal transaction. (Aardt,
2008). However, on record many small scale businesses still collapse due to lack of
proper financial record keeping among other problem. (Samuel, 2012).
Business which even keep accounting record did not keep all relevant books of accounts
(Antony, 2014). It was observed that majority of Small Scale Business do not keep
complete accounting record because of lack of accounting knowledge and as a result
there is inefficient use of accounting information in financial performance
measurement .The Small Scale Business still fail to keep proper books of accounts
despite the importance of records keeping in decision making and planning (Maseko,
2011).
There is strong relationship between business performance and the level of training in
business management especially in business accounting record keeping. Business
management entails keeping proper records of the business transactions. Knowledge and
skills in bookkeeping is especially one major factor that impacts positively on
sustainability and growth of SMEs. Failure to record business transaction leads to
collapsing of the business (Howard, 2009).
Bookkeeping have been perceiver in many nation of the world as a method for ensuring
monetary development. For enterprises to continue to be in existence, develop and
accomplish distinction, it ought to have dynamic unfaltering and productive
bookkeeping method. In this way a good financial related records keeping has turned out
to be fundamental piece of overseeing firms in today’s aggressive and challenging
2
business condition. A good accounting record keeping enables business association to
arrange appropriately and furthermore check for misappropriation of asset of the firm.
Keeping appropriate books of records is a fundamental to the development and survival
of business. (Ademola, 2012).Qualified bookkeeper ought to be hired to do this job; he
or she ought to have the needed skills to control money as in liquidity, the answer for the
achievement of any business. Qualified financial record keepers assume a basic part in
leadership and strategy of doing business. Accountant with higher abilities and
experience have more noteworthy impact on the basic leadership procedure of a business
(Tout, 2014).
A sufficiency financial record keeping will give the needed data to help SMEs to make a
right business decision. In spite of the fact that book keeping records have been referred
to as one of the conceivable component adding to achievement business. (Azeko, 2015 ).
Business failures to poor administrative abilities and absence of strategic leadership and
further affirmed that poor or absence of record keeping in the business and particularly
to the SMEs, contribute to their collapse (Germain, 2010)
The importance of keeping proper accounts in promoting the growth of small business
has been acknowledged in prior studies on small business growth and development;
other studies have identified lack of keeping financial report as the most important
constraint to growth in the small business sector (Tylor, 2008).
Small and medium enterprises
Small and medium enterprises are giving wide spreading acceptance as viable drivers of
economic growth which will effects on employment generation. However, several of
these enterprises demise without fulfill expectation due to poor management arising
from week accounting structure (Olatunji, 2013). However, the number of people not to
be in good indicator especially if the industry is labor intensive. This is true for the
country like Tanzania where there is labor intensive approach to industrialization policy.
3
The failure by Small and Medium Enterprises to manage cash flows result in illiquidity
and finally the demise of SMEs. (Peacock, 2000). Accounting record collects, classifies,
analyses, and process and summarizes business transactions in the book of accounts. A
system should be simple to use, easy to understand, reliable, accurate consistent and
designed to provide information on a timely basis. The accounting record system
provide a source of information to owners of SMEs operating in any industry for use in
the measurement of financial performance. Although, SMEs form a substantial part of
the economy, unfortunately their contribution to the economy is yet to be fully realized
due to a myriad of problems. This is evidenced by the large number of SMEs spread
throughout the country but, with very little to show in terms of sustained growth and
diversity in Ghana’s industrial output. Moreover, most SMEs work on small margins of
cash flow, such that when they are faced with financial difficulties, they have neither the
necessary resources nor the borrowing power like the bigger companies to sustain their
operations.
This problem generally occurs in SMEs due to lack of financial management practices.
Cash outflows seem to outweigh cash inflows, access to credit facilities and loans are
limited. The result is normally the SMEs operating on losses other than the profits they
think and that eventually collapse the business. As a prerequisite to profitability, sound
business practices must be adopted to ensure the business ability to survive in the rapidly
changing environment. Small business owners have failed to recognize the importance
of putting in place a well-structured system as a means of helping them to provide
accurate financial statement through which credit facilities could be obtained from banks
and increasing their capital base on adequate and proper records business decision
making (Kayanula, 2000).
Observed that poor records keeping or non-availability of financial records lead to
mismanagement of resources and poor cash management and this do have negative
effect on the growth of SMEs leading to the collapse of some of them. Therefore are
4
important feature of any business unit, as it helps in preparing up to day financial
statements that are used in prudent (Dawuda, 2015).
Performance
Performance refers to an ongoing process that involves managing the criteria for which
an institution, agency or project can be held accountable (Durant, 2001). These criteria
are represented as components parts of an internal system and cover the institutions
ability to; control financial expenses, satisfy staff, deliver timely interventions and
respond to target group reactions to interventions. Performance of a business refers to
the ability of business to meet the required standards, increase market share, improve
facilities, ensuring returns on profitability and total cost reduction and once this is
achieved, a business is believed to be performing effectively (Fitzgerald, 2006).
Performance is an approach determining the extent to which set objectives of an
organization are achieved in a particular period of time. The objectives or goals can be
in financial or non-financial terms. Performance may be determined by macro and
micro-factors. Macro-economic factors are those pertinent to a broad economy at the
regional or national level and affect a large
population rather than a few select individuals. Macro factors include GDP and also
Micro factors individual risk exposure, operating strategies and degree of management
strategies. As managers develop operating plans, they think how those plans will affect
the performance of the organization. Record keeping conveys substantial information
about the financial strength and current performance of an enterprise. Mangers find
organizational statements useful in making decisions. (Olatunji, 2013)
1.3 Statement of the Problem
Some studied conducted in Tanzania and other countries suggest that the position of
accounting record to the performance of SMEs success is the positive (Howard, 2009).
Small and medium enterprises are giving wide spreading acceptance as viable drivers of
economic growth which will effects on employment generation. However, several of
5
these enterprises demise without fulfill expectation due to poor management arising
from week accounting structure (Olatunji, 2013).
However, the number of people not to be in good indicator especially if the industry is
labor intensive .This is true for the country like Tanzania where there is labor intensive
approach to industrialization policy Accounting records keeping is a set of components
that collects, records, classifies, analyses, and processes and summarizes business
transactions in the books of accounts. A system should be simple to use, easy to
understand, reliable, accurate consistent and designed to provide information on a timely
basis (Romney, 2003).
The Small and Medium Enterprises are expected to have accounting record which will
help to prepare the financial statement. As the accounting record is the crucial factor in
determining its performance, accounting standard is to be considered when keeping
records in the books of accounts. Other mentions the role of education and training as
important to the business success (Simpson, 2004).
Despite of the fact that, most SMEs perform accounting record in improper way that
they don’t keep records well and also they have inadequate knowledge in keeping the
account in the books of accounts. In this if the accounting record in SMEs are not
proper, will lead to the poor performance in the business and it will cause the business to
collapse.
Therefore, the study aim to assess the contribution of accounting records on the
performance of Small and Medium Enterprises, a case of Iringa Municipal so that the
SMEs can be able to perform proper record and keeping all records to the books of
accounts which will enhance a better performance of the SMEs.
1.4 Objectives of the Study
In this section general objective and specific objectives are stated.
6
1.4.1 General Objective
The main objective of the study was to assess the contribution of accounting records on
the performance of Small and Medium Enterprises in Tanzania, a case study of Iringa
Municipality.
1.4.2 Specific Objective
More specifically the study attempted to:
i.
To determine proper accounting records to improve the performance of SMEs.
ii.
To determine the SMEs performance in preparation of accounting records.
iii.
To find out the proper accounting records procedures to improve performance of
SMEs.
1.5 Research Question
This study aimed at answering the following questions;
i.
To what extent do proper accounting records improve the performance of SMEs?
ii.
To what extent SMEs perform in preparation of accounting records?
iii.
To what extent the proper accounting records procedures improve the
performance of SMEs?
1.6 Hypothesis of the Study
H01: There is significant relationship between proper accounting records and the
performance of SMEs.
H02: There is significant relationship between SMEs and preparation of accounting
records.
H03: There is significant relationship between proper accounting records procedures and
the performance of SMEs.
7
1.7 Significance of the Study
1.7.1 Enterprises
This will improve the performance of the business. SMEs will know the advantages of
keeping records properly so that they was able to maintain transactions, also will help
them to know how to manage their finance profit and loss in their financial statement
also it can help to know the difference standards which can help them to prepare the
accounting records in proper ways.
1.7.2 Ruaha Catholic University
The study will show the University the advantages of holding some seminars for
entrepreneurs educating the need of keep accounting record for their daily transaction so
that they can manage the business properly also in the future use it can help to prepare
the financial statements.
1.7.3 Government of Tanzania
The study findings will expect to provide practical guidance to different sectors of
Government especially the business sector that may help in ensuring that the small
enterprises are growing and performing well at regional and national level.
1.7.4 Researcher and Academicians
The study can also be used as a reference to academicians and other student undertaking
same field on matters patterning to customer retention studies. Also the study was useful
to the researcher since it serves as the partial fulfillment of the requirement for the award
of the Bachelor Degree of Accounting and Finance with Information Technology from
Ruaha Catholic University.
1.8 Scope of the study
The study focused on the appraisal of the contribution of accounting records to the
performance of small scale and medium business enterprises. It elucidate the nature and
8
accounting regulatory framework of accounting records also the study was conducted on
SMEs in Iringa Municipality. A researcher chooses Iringa because it’s her area of
resident and it was easy to collect data.
1.9 Limitation of study
Availability of SMEs owner; SMEs traders are seems to be very busy, it was difficult for
a researcher to get their time and attention regarding to all questions which the study will
need answers. This study was carry for a short period to follow the deadline of the
academic calendar of RUCU; this caused the time constraint limitation..
1.10 Definition of Key Terms
1.10.1 Accounting Records
Record keeping systems as set of components that collects, records, classifies, analyses,
and processes and summarizes business transactions in the books of accounts. A system
should be simple to use, easy to understand, reliable, accurate consistent and designed to
provide information on a timely basis. (Romney, 2003)
Record keeping involves identification, classification, storage and protection, receipt and
transmission, retention and disposal of records for preparation of financial statements
(Parker, 2002).
1.10.2 Performance
Performance refers to an ongoing process that involves managing the criteria for which
an institution, agency or project can be held accountable (Thibodeau, 2001)
Performance of a business refers to the ability of business to meet the required standards,
increase market share, improve facilities, ensuring returns on profitability and total cost
reduction and once this is achieved, a business is believed to be performing effectively
(Fitzgerald, 2006).
9
Performance as outcomes, end results and achievements (negatives and positives) arising
out of organizational activities. They argued that it is essential to measure strategic
practices in terms of outcomes (Curley, 2005).
1.10.3 Small and Medium Enterprises (SMEs)
Small and Medium Enterprises (SMEs) what constitutes “small” in terms of government
support and tax policy varies by country and by industry. Businesses with 10 or fewer
workers are called micro-enterprises. Those with 11-50 people are small enterprises and
51-100 are medium. However, the number of people may not be a good indicator
especially if the industry is labor intensive. This is true for countries like India where
there is labor intensive approach to industrialization policy. In some cases it is possible
for a trading organization to transact huge sums of business worth transactions and yet
employ few people (Maseko, 2011).
1.11 Organization of the Study
This study was organized in five chapters. Chapter one explained about the background
of the study, statement of the problem, general and specific objective of the study, a
research question, a hypothesis of the study, scope and significance of the study. The
next chapter covered various theories, empirical studies, research gap and conceptual
framework which were overview about each dependent and independent variables which
was presenting with summary and conclusion. Chapter three explained about research
methodology that was using in this study by explaining area of study, procedures of data
collection and analysis, validity and reliability of this study as well as ethical
consideration of this study. References and appendices covered the last.
10
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter aims at reviewing important literatures related to research topic. It consists
of both theoretical and empirical review. In theoretical literature review the researcher
will use the theoretical review on how different authors have defined them and
empirical literature review which will provide the different findings from different
researcher who has done similar study.
2.2 Theoretical Literature Review
2.2.1 Decision Usefulness Theory
The decision usefulness theory tries to develop a scientific and objective method to help
standard setters in their choice of the best alternative of the measurement and the
presentation of accounting data.
According to this theory, the best accounting standards is the one providing the most
helpful financial information to users in their decision process.
2.2.2 Origin of the decision usefulness theory
The concept of decision usefulness has been introduced in accounting theory in 1966 by
a committee created by the American Accounting Association (AAA). This committee
was charged to design A Statement of Basic Accounting Theory (ASOBAT). According
to this committee, the most important criterion in choosing accounting measurements
method is the decision usefulness of accounting information for users. This decision
usefulness should be evaluated by the predictive ability of the accounting information.
The more accurate users can predict economic and financial events using accounting
information, the more useful this information is for them. This criterion should give
standard setters a handy tool in the choice of the best accounting measurements. They
11
will just have to find which alternative is able to predict valuable events for users with
the smallest error margin (Beaver, et. al.1968). The only problem is that the committee
did not define the different users of the accounting information.
Importance of the decision usefulness theory for standard setters
One of the most important documents for standard setters and accounting professionals
is the conceptual framework for financial reporting. This conceptual framework states in
its first chapter that financial reporting should aim to provide useful financial
information to investors, lenders, and other creditors concerning their capital allocation
decisions. Beside these capital providers, financial information may accessorily be
useful to other users. It is clear that the most important group targeted by standard setters
is the group of capital providers. To decide in which firm they want to invest (or
disinvest) their money, these capital providers should be able to rely on the published
accounting information.
This theory guide the researcher in assessing which procedures and methods that can be
useful in preparation of accounting records on the success of small and medium
enterprises.
2.2.3 Positive Accounting Theory (PAT)
The Positive Accounting Theory (PAT) could be seen as a complement of the Agency
theory. Like the agency theory, the PAT is based on the discrepancy between the
interests of shareholders (but also other users of financial statements) and those of
managers.
According to the positive accounting theory, outside users of accounting record always
wish to have relevant, reliable, and comparable financial statements presenting a true
and fair view of the financial position and performance of firms. This desire is not
always shared by internal users of the financial statement information like managers. It
12
can be sometimes tempting for managers, who are responsible for the preparation of
financial statements, to use earnings management to achieve their own goals.
The Positive Accounting Theory goes a step further by giving a description of the
motivations of SMEs to deviate from their duty to produce financial statements a giving
true en fair view of the financial position and the performance of their firms. Based on
this description, this theory also tries to predict the behavior of managers in some
specific situations. This positive accounting theory which describes and explains
existing and observed phenomena is the opposite of normative theories which explains
how phenomena should be when some assumptions are met.
This theory helped the researcher in determining the performance of SMEs and how can
those accounting records contribute to the success of the business.
2.3 Empirical Literature Review
Empirical review is an interdisciplinary field of research which includes the psychology,
sociology, philosophy, the contextual study of literature and the history of reading
literary texts. Also is based on observed and measured phenomena and derives
knowledge from actual experience rather than from theory or belief.
2.3.1 Proper accounting records
The history of accounting records is thousands of years old and can be traced to ancient
civilization. Accounting records is a system of book keeping so named because every
entry to an account requires a corresponding and opposite entry to a different account.
(lucapacioli, 1992).A good accounting record keeping enables business association to
arrange appropriately and furthermore check for misappropriation of asset of the firm.
Keeping appropriate books of records is a fundamental to the development and survival
of business (Ademola, 2012).Qualified bookkeeper ought to be hired to do this job, he or
she ought to have the needed skills to control money as in liquidity, the answer for the
achievement of any business. Qualified financial record keepers assume a basic part in
13
leadership and strategy of doing business. Accountant with higher abilities and
experience have more noteworthy impact on the basic leadership procedure of a business
(Tout, 2014).Good record management helps in controlling the creation and growth of
records to reduce operating costs, assimilation of new records management technologies
and in ensuring regulatory compliance also good accounting record enables the business
organization to plan properly and also check for misappropriations of recourses of the
organization. The keeping proper book of accounts is essential to the growth and
survival of the business. In order to ensure efficiency, effectiveness and continuing
survival of business organization, management must seek for reliable, relevant, accurate
and timely financial information for planning and decision making (Edun, 2013). The
importance of keeping proper accounts in promoting the growth of small business has
been acknowledged in prior studies on small business growth and development; other
studies have identified lack of keeping financial report as the most important constraint
to growth in the small business sector (Tylor, 2008).
2.3.2 Accounting record to the Small and Medium Enterprises performance
Performance refers to an ongoing process that involves managing the criteria for which
an institution, agency or project can be held accountable (Durant, 2001).This is true for
the country like Tanzania where there is labor intensive approach to industrialization
policy. As the accounting record is the crucial factor in determining its performance,
accounting standard is to be considered when keeping records in the books of accounts.
These criteria are represented as components parts of an internal system and cover the
institutions ability to; control financial expenses, satisfy staff, deliver timely
interventions and respond to target group reactions to interventions. Performance of a
business refers to the ability of business to meet the required standards, increase market
share, improve facilities, ensuring returns on profitability and total cost reduction and
once this is achieved, a business is believed to be performing effectively (Fitzgerald,
2006). Small and medium enterprises are giving wide spreading acceptance as viable
14
drivers of economic growth which will effects on employment generation. However,
several of these enterprises demise without fulfill expectation due to poor management
arising from week accounting structure (Olatunji, 2013).Small and Medium Enterprises
(SMEs) what constitutes “small” in terms of government support and tax policy varies
by country and by industry. Businesses with 10 or fewer workers are called microenterprises. Those with 11-50 people are small enterprises and 51-100 are medium.
However, the number of people may not be a good indicator especially if the industry is
labor intensive. This is true for countries like India where there is labor intensive
approach to industrialization policy. In some cases it is possible for a trading
organization to transact huge sums of business worth transactions and yet employ few
people (Maseko, 2011).
Challenges in preparation of accounting records
Records and information management practices among SMEs in Tororo district,
Uganda. The purpose of the study was the realization of the significant roles
played by small and medium enterprises (SMEs) in economic development and
the crucial values attached to efficient and effective records and information n
management in decision making. The fact that little seems to be done to improve on the
management of records and information among the SMEs in Uganda necessitated this
study.
The study therefore aims to investigate the management of records and
information among the SMEs in Tororo district in Uganda. The study found that SMEs
have many issues and challenges related records and information management. The
paper concludes that a concerted effort should be 24 made and proposes that
SMEs manages be trained on key skills for records and information management
(Obura, 2012).
Other related study globally
The following are studies from other researchers outside Tanzania which are related to
this research study:
15
Sian and Robert ( 2009) in their study reported those in recent years there has been a
growing interest in the provision of financial information by small business entities. In
the UK, regulation has taken the form of the Financial Reporting Standard for Small
Enterprises (FRSSE). However MSEs in UK too use reporting guidelines for small
enterprises issued by UNCTAD apart from the International Accounting Standards
Board's (IASB's) standard on the subject. Despite this international interest, academic
research investigating the accounting and financial reporting needs of small enterprises
remains relatively scarce. This UK-based study aims to assess the potential demand for
and usefulness of reporting guidelines specifically designed for small owner-managed
enterprises (SOMEs).The study found that most SOMEs produce accounting records,
often based on computerized packages. However, financial awareness varies
significantly and there is evidence that most small enterprise owners rely on their
accountants to prepare their financial statements and are often left bewildered by the
complexity of the information provided. With UK and the future IASB standards being
designed to meet the needs of the largest small and medium-sized enterprises (SMEs),
there does appear to be a relatively high level of agreement that specific guidance for
much smaller entities would be desirable. However, many of the accountants felt that
some aspects of existing regulations, such as the UNCTAD level 3 guidelines, were too
complex, indicating that regulators need to carefully consider the contents regulations
for the smallest entities.
The study indicated that the most widely used and most useful sources of financial
information are the monthly/quarterly management accounts and cash flow information
in various forms. Multivariate analysis reveals that the utility of the periodic
management accounts is contingent upon the size of the business and the receipt of
management advice from the auditor/accountant. Therefore the results show that the
majority of small companies adopt practices that include formal methods of planning
and control. There is a strong emphasis on controlling cash and monitoring performance
in the context of maintaining relationships with the bank.
16
(Karunananda and Jayamaha, 2011)) researched on the financial practices among Small
&Medium enterprises (SMEs) in Sri – Lanka and their impact upon business
performance. A total of 100 firms were used to determine the extent of their compliance
to five identified reporting practice. Data was collected through structured
questionnaires.
In
their
research
an
attempt
was
made
to
ascertain
the
comprehensiveness of financial practices of SMEs. In their review they considered the
SMEs financial systems, financial audits, historical and future oriented financial
reporting practices and analysis of historical financial statements .Through using
correlation coefficients, they were able to establish that there exists a significant
connection between the comprehensiveness of financial practices adopted by SMEs and
their performance. SMEs with appropriate financial systems were found to be
performing better than those with inferior systems. Their findings revealed poor record
keeping by SMEs, inefficient use of accounting information to support their financial
decisions, low quality and unreliable financial data. They recommended that SMEs
should engage proper financial practices for better performance. Sri Lanka recognizes
the need to accelerate the growth of SMEs for sustainable development.
Amoako (2013) investigated the record keeping strategies utilized by SMES in Kumasi
(Ghana). Data was based on responses to a structured questionnaire from 210 SMES in
Kumasi that were conveniently selected. This was done on wide range of retail
businesses including pharmaceuticals, hard wares, hotels, general merchants, printing
and stationary enterprises, workshops (motor and furniture) amongst others. The
questionnaire had three parts that covered business demographic profile, categorization
of business that keep and those that do not keep proper records and finally categorization
of responses based on reasons why a business maintains or do not maintain accounting
records.
Onaolapo (2014) investigated the effect of keeping accounting records on the
performance of small scale enterprises in Oyo state in Nigeria. A combination of
17
descriptive and cross sectional research design was used. He used a stratified method of
sampling and had 113 respondents in his sample who were then grouped on the basis of
type of their business. Data was collected through personal interview and questionnaires
and then analyzed through descriptive statistics. The independent variables incorporated
in his model showed that 86% of an enterprise’s performance depended on accounting
records. His findings revealed that majority of respondents did not keep comprehensive
accounting records. However these enterprises measured their profitability vaguely but
lacked budgets and failed to prepare annual financial statements. He recommended that
owners and managers of small scale enterprises should embrace proper accounting
practices in record keeping for effective financial performance.
Studies from East Africa
The following are the studies from other researchers related to this research study:
Nkonoki (2010) studied factors limiting the success and/or growth of small businesses
in Tanzania An empirical study on small business growth. The aim of this study was to
determine the factors that limit the growth/and or success of small businesses in
Tanzania and to try and suggest solutions to these factors. The study found that improper
record keeping comes as a result basically of inadequate education and training in
business. As a result firms lose track of its cash flows and in turn leading to cost control
and liquidity problems just to name a few. If the records of the transactions a business
undertakes are not kept properly, growth cannot be achieved since the firm loses track of
where it is heading.
The study concluded that constraints such as corruption, in access to finances/capital
constraint, government policy, unfavorable economic conditions, people factor/lack of
needed talent, lack of proper record keeping, lack of or improper professional advice and
consultation, theft/cheating and lack of trust in doing business, lack of proper business
plan/vision for the business, inadequate education and training and lack of background
and experience in the business do limit small firms growth in Tanzania. The study
18
emphasizes the importance of proper record keeping because it enables small business to
have accurate information on which to base decisions such as projecting sales and
purchases or determining the break-even point and making a wide range of other
financial analyses. However, the persistent lack of proper records has seen the closure of
some businesses, thereby making it a significant issue for business success.
Okwena (2011) assessed the effects of proper book keeping practices on financial
performance of SMEs in Kisii Municipality. His study employed a cross-sectional
survey research design. The target population consisted of 3528 owners/managers of
SMEs. Stratified and simple random sampling techniques were used in the study to
select a sample of 97 SMEs. Structured questionnaire were used to collect quantitative
data from the primary sources. Descriptive statistics such as frequency distribution and
percentages were used to facilitate the change of raw data into a form that is easy to
understand and interpret. Pearson correlation coefficient and simple linear regression
model were used to analyze quantitative data. He found that about 63.9% of SMEs in
Kisii practice single entry book keeping. Pearson correlation analysis showed that
financial performance has a very strong positive relationship to effective book keeping
at a coefficient of 0.944. He however found little knowledge of book keeping among
SMEs and this highly contributed to SMEs failure. He recommended for sensitization
programmers to equip SMEs owners with book keeping knowledge.
2.4 Research gap
Many researchers have studies about SMEs, focusing on different study problems
such as; management, accounting and financial needs and challenges, causes of small
business failures. And others investigated about the contribution of accounting records
to the performance of SMEs. They have pointed out that, some SMEs produce
accounting records based on computerized packages, relying on accountants but
often they
left
the
complexity
of
information,
accounting
records
hinder
application of appropriate measures in evaluating business success. Moreover, among
19
the studies, few studies are done in Tanzania. Therefore the study seeks to cover this
gap.
2.5 Conceptual Framework
Mugenda (2003) say a conceptual framework is a graphical or diagrammatic
representation of the relationship between independent and dependent variable in a
study. It helps the researcher see the proposed relationship between the variables easily
and quickly. Conceptual framework of this study explains relationship between
independent variables and dependent variable. Independent variables in this study are
proper accounting records, preparation of accounting records, Accounting records
procedures and dependent variable SMEs performance.
Figure 2.1: Conceptual Framework
DEPENDENT VARIABLE
DEPENDENT VARIABLE
INDEPENDENT VARIABLES
SMES PERFORMANCE
PROPER ACCOUNTING
RECORDS

PREPARATION OF


ACCOUNTING RECORDS

ACCOUNTING RECORDS

PROCEDURES

Source: Researcher (2018).
20
True
and
a
fair
position of the business
Increase in net profit
Increasing
in
selfemployment
Expansion of established
business
Improvement in financial
management skills
Competitiveness
2.6 Definition of variables
2.6.1 Accounting records
Accounting records are all of the documentation and books involved in the preparation
of financial statements or records relevant to audits and financial reviews. Accounting
records include records of assets and liabilities, monetary transactions, ledgers, journals
and any supporting documents such as checks and invoices (Wood, 2005).
2.6.2 Preparation of accounting records
Preparation of accounting records is governed by both local and international accounting
standards. Generally Accepted Accounting Principles (GAAP) is the standard
framework of guidelines for financial accounting used in any given jurisdiction. It
includes the standards, conventions and rules that accountants follow in recording and
summarizing and in the preparation of financial statements (Ramsey, 2001).
2.6.3 Accounting records procedures
Accounting procedures dictate how companies record and report their financial
information. Generally accepted accounting principles (GAAP) is the leading authority
for accounting standards in the private and government industries. These principles
provide companies with basic understanding of how to record information for internal
and external business use. Because these principles are based on a conceptual
framework, business owners have some ability to develop accounting policies for
applying GAAP to their business (Adam, 2009).
2.6.4 SMEs performance
Performance of a business refers to the ability of business to meet the required standards,
increase market share, improve facilities, ensuring returns on profitability and total cost
reduction and once this is achieved, a business is believed to be performing effectively
(Fitzgerald, 2006).
21
2.7 Chapter Summary
This chapter provides the theoretical review, the empirical studies which have already
been conducted by other researches, research gap, and conceptual framework and
operational terms. Chapter three will explain about research methodology that was using
in this study by explaining area of study, procedures of data collection and analysis,
validity and reliability of this study as well as ethical consideration of this study.
References and appendices will cover the last part of the study.
22
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
Research methodology defined as a way to systematically solve the research problems.
Research methodology is the procedural plan that is adopted by the researcher to validly,
objectively, economically and accurately answer the research questions (Babbie 2002).
The chapter intends to give a brief description on how the study was conducted. The
chapter will describe the area of study; population; research design, sampling technique,
methods of data collection, and research procedure to be used and the methods of data
analysis to be applied.
3.2 Area of the Study
This study was conducted at Iringa municipality in Tanzania to assess the contribution of
accounting records on the performance of Small and Medium Enterprises. The reason
for choosing this area of the study simply is because it was very familiar to the
researcher and will help to get the information needed in data collection. The researcher
chose this area because of population whereby at Iringa municipality the population is
high so this can help to access more information compare to interior areas. Also the
researcher chose SMEs based in Iringa Municipality because it is the place in Iringa
Region with various financial Institutions dealing with large, small and medium
entrepreneurial businesses as the case study, also mixed socio economically, containing
people of higher socio economic status as well as government civil servants living in
reasonable accommodation. Therefore the reason of choosing this area is because I want
to know if SMEs are keeping records properly.
3.3 Research Approaches.
Kothari (1990) says that there are two basic approaches to research, quantitative and
qualitative approach. Quantitative research involves the use of computational, statistical,
23
and mathematical tools to derive results. This method was chosen because it helped
researcher to quantify the problem and understand how prevalent it is by looking for
projectable results to a larger population. Also the researcher used quantitative approach
to analyze the data collected. Quantitative research is a structured way of collecting and
analyzing data obtained from different sources. A quantitative approach was used for
seeking the quantitative data though close questions which was appear in questionnaires
and also it helped to seeking structured responses that could be summarized in numbers
like percentages and averages.
3.4 Research Design and Technique
Descriptive research design was used to describe the characteristics of community,
population, organization or people who are participating in the study. The characteristics
of a community include gender, age, education level and even marital status of
respondents (Kothari 2004). The study was conducted by using descriptive research
design.Thepurposeofchoosingdescriptivestudiesistofindinterrelationshipsbetweenvariables. Descriptive design was useful for collecting data and
techniques to be used in analysis. Moreover this design chosen to provide insight and
comprehension concern the assessment the contribution of accounting records on the
performance of Small and Medium Enterprises. The reason for choosing this method is
to increase the reliability of the report.
3.5 Sampling Design
A sample design is a definite plan for obtaining a sample from a given population. It
refers to the technique or the procedure the researcher would adopt in selecting items for
the sample. This sample design is determined before data collection (Kothari, 2004).
3.5.1 Population and target population
Population means the entire mass of observations, the parent group from which a sample
is to be formed (Singh, 2006). The target study under this study was entrepreneurs and
24
small and Iringa Municipality has a population of relatively low socio-economic status
of the people who contributed large proportion to the economy of Tanzania. A large
proportion of people living in this Municipality are engaged in small business or manual
labor (both skilled and unskilled). The population of this study consisted of small
business and entrepreneurs.
3.5.2 Sampling frame
Sampling is the process of obtaining information about an entire population by
examining only part of it (Kothari, 2004). Sample frame ids defined a source material
from which a sample is drawn selection of some part of an aggregate on the basis of
which judgment or influence about the aggregate totally is made (Kothari 2004).
Table 1: The target population with respective sample size
Respondents
Population
Sample size
Entrepreneurs
800
50
Small and Medium enterprises
700
50
Total
1500
100
Source: Researcher, 2018
3.5.3Sampling technique
The researcher will use the probability sampling techniques. Simple random sampling
approach was suitable for this study because of its advantages like minimization of bias
results, improver liability and validity of data from respondents who represents the
population.
This implies that all
participants in the study population had equal
chance of being selected. Purposive sampling was also be used to select only those
respondents with importance attached to their office.
25
i.
Simple Random Sampling
Stanley (2013) defines simple random sampling as a probability sampling whereby all
members in a population have equal chance of being selected to form a sample. This
study employed simple random sampling after purposive sampling is done. Each and
every entrepreneur in Iringa Municipality had an equal chance to be included in this
study.
ii.
Purposive Sampling
According to Ramsey (2006), the purposive sampling is a sampling method in which
elements are chosen based on purpose of the study. The idea is to pick out the sample in
relation to some criterion, which is considered important for the particular study. The
study employed purposive sampling in drawing a sample from each small business in
Iringa Municipality who are assistants of the researcher to obtain important information
in providing the solution of the problem under the study.
3.5.4 Sample size
Sample size is a subset of the population which represents the accessible population.
The sample size should have some common characteristics with the target population
Where by: N=Number of population
n= sample size
e= standard error 100%
26
3.6 Data types
This section describes the types of data that was collected in the field which was h
qualitative and quantitative data using primary data sources. Data means information
which has not yet processed for decision making (Saunders et al, 2009).
3.6.1 Primary Data
The researcher will use the questionnaires in collecting data. The questionnaires were
distributed to the small and medium enterprises and also helped to collect information
for the specific purpose of this study.
3.6.2 Secondary Data
Secondary data was gathered from various sources including both published and
unpublished source such as books, journal articles research report and seminars.
3.7 Data Collection Methods
Data collection methods used in this reward was questionnaire. This research design
helped the researcher to get in-depth information relating to the topic in this study .This
section also described the types of data that was collected in the field which was
quantitative data using primary data sources. Data means information which has not yet
processed for decision making (Saunders et al, 2009).
3.7.1
Questionnaire
Questionnaire is a research instrument consisting of a series of questions and other
prompts for the purpose of gathering information from respondents. This consist of a
number of questions printed or typed in a definite order on a form or set of forms. The
questionnaires were issued to the respondents who read and wrote down reply of their
own. The researcher used the structured questionnaire during the case study in which
questions; a set of questions seeking data from respondents was organized and handled
to them. The researcher used questionnaire because they are reliable, simple, needs
27
minimum costs and the required data collected with a minimum number of errors.
Questionnaires were used to bring out aspects of the research.
3.8 Data analysis Methods
All data collected was organized and checked before presented and analyzed to ensure
completeness, accuracy, and validity. By completeness, it means all questionnaires were
checked to see whether all questions have been answered and handed-over. Either,
questions was checked if they are complete and the meaning corresponds to the data
needed. By clarity, it means data was checked if they are correct and correspond to the
question’s requirements. By validity, data was checked in terms of time reported and if
they conform to the objectives of the study. This facilitated proper presentation in terms
of tabulation, charts and graphs generation and computation of percentage and
frequencies through SPSS. Discussion and Analysis was done in accordance with
percentage and frequencies generated and interpreted accordingly. By so doing, the
researcher was able to discover whether data collected or information provided has been
in alignment with the stated research objectives and questions.
3.9 Reliability and Validity of data
Reliability and validity requires the use of standardized information collection
instruments and survey procedures that are designed to enhance consistency. Reliability
and validity was extent which survey information is relevant to the conclusion being
drawn and is sufficiently accurate and complete to support the conclusion,
3.9.1 Reliability of Data
The researcher ensured reliability of data by conducting a minor pilot study to test the
reliability and validity of the questionnaires. The pilot study was conducted to the small
businesses Iringa Municipality whereby entrepreneurs was asked to fill in the
questionnaire so as to minimize errors, time to be consumed when filling the
questionnaires, and to check whether the constructs are effectively covered. The
28
researcher accommodated the comments of those informers who were involved in pretesting so as to modify the instruments.
3.9.2 Validity of Data
.
Validity of data determines whether the research truly measures that which it intended to
measure or how truthful the research results are. Validity in this study was ensured and
achieved through checking inaccuracies or missing information at various points in the
collection, maintenance, processing, and reporting of data, proper processing and
reporting of data, usage of proper sampling procedures in order to obtain a
representative sample, careful selection of standardized.
3.10 Ethical Considerations
Saunders, (2009) argues that ethical issues are very important to be considered in the
study such as voluntary participation, no harm to the participants, ensuring anonymity
and confidentiality and avoiding deception. During this study the following ethical
issues was observed; the researcher asked for permission to collect the data to the Small
and Medium Enterprises in Iringa Municipality, considerations was applied to methods
of data collection, presentation and interpretation of the findings, and citations as well as
referencing.
3.11 expected results
Due to validity and reliability of the study the result was expected to be consistent and
will provide the answers of the research questions. And also other research which was
done after this study will come with the same answers which were provided in this
research.
29
3.12 Chapter Summary
This chapter describes the research methodology which was used in this study. This
chapter also constitutes the components of research methodology such as research
design, population and sampling design, data collection and research procedures and
data analysis. Also research design was used in collecting, measuring and analyzing
data. Data was collecting by using of questionnaires and was analyzing by using
quantitative approach.
30
CHAPTER FOUR
DATA ANALYSIS, INTERPRETATION AND DISCUSSION
4.1 Introduction
The sections of this chapter are as follows: demographic information, findings according
to objectives, test of hypothesis, regression analysis, and discussion of findings.
Questionnaires were distributed to 100 respondents.
4.2. Demographic Information
Demographic characteristics of the respondents were analyzed in Table 4.1 below
Table 4.1: Demographic Information
DEMOGRAPHIC INFORMATION
Male
Gender
Female
18-25
Age
26-30
31-40
41 and above
Primary
Education
Secondary
Diploma
Degree
Master
Single
Marital Status
Married
Widow
Type of Ownership Individual
Partnership
Agency
Own Money/Family
Capital
Microfinance company
SACCOS
Source: Field Data 2018
31
Frequency
42
58
30
32
20
18
15
19
35
30
1
22
59
19
44
30
26
33
37
30
Percent (%)
42
58
30
32
20
18
15
19
35
30
1
22
59
19
44
30
26
33
37
30
i.
Gender
Of 100 respondents 42% were respondents were female and 58% were male. These
results are not accidental but factual in that generally there are more males workers than
females in different organizations in Tanzania.
ii.
Age
The statistical data indicates that the majority of the participants in the current study
were aged from 18-30 years (Table 4.1). Additionally, 62% of the total participants were
aged between 18 and 30 years, 20% of the participants were aged between 31 and 40
years, 18% were above 41 years
iii.
Education
Furthermore, categorization of participants by their educational qualifications was as
follows; 34% had attended primary and secondary education, 35% had Diploma
qualification, 30% had Bachelor’s Degree and only 1% had Masters. The workers with
introduction courses constituted the majority in the study sample.
iv.
Marital Status
Moreover, the sample consisted of single, married, widows, widowers, divorced and
separated workers. Descriptive statistics indicate that 22% of the participants were
single, 59% were married, and 19% were widower (Table 4.1). Interestingly, on the
average educated male Tanzanians get married when they are 20 or more years old.
v.
Type of Ownership
From the table above, the findings shows that that majority of the SMEs in Iringa
Municipality are owned by individuals by 44%, 30% was partnership and only 26% was
agency.
vi.
Capital
32
The question was asked requesting the respondents to indicate the source of capital. 37%
of the respondents indicate that they obtained their capitals from Microfinance
companies, 33% obtained from their families and 30% of the respondents declared that
they obtained capital from SACCOS.
4.3 Test of Reliability and Validity
4.3.1 Reliability
Reliability of the study was the degree to which a test consistent measures whatever was
measured, the study achieved it through formulating simple questionnaire in a simple
short format and conducting 1% pilot test and also the researcher achieved the reliability
by the use of same informants, methodology and methods or tools of data collection.
(Saunders, 2009)
Table 4.2: Reliability Statistics
Reliability Statistics
Cronbach's Alpha
N of Items
.806
Source: Field Data 2018
20
In this study reliability test was done using Cronbach alpha, customarily values above
0.5 of Cronbach alpha coefficients are considered significant even though Cronbach
alpha coefficients that range from 0.6 and above are considered more acceptable in
scientific research although lower values can be used as well and accepted (Hair, 2003).
Therefore, in this study the results from the findings of Cronbach’s Alpha is 0.806, the
coefficient is significant as shown in the table 4.2 above.
4.3.2 Validity
Variability refers to the extent to which empirical measures adequate reflects the real
meaning of the concept under consideration or refers to the accuracy or truthfulness of
the measurement (Babbie, 2009).
33
In order to ensure that each dimension as aligned to its construct, exploratory factor
analysis was done and the results are displayed below in Table 4.3. Before actual
exploratory factor analysis was done KMO and Bartlett's Test was run to ensure sample
adequacy and items are correlated enough to carry out factor analysis as it described
below in Table 4.3 KMO and Bartlett's Test.
Table 4.3: KMO and Bartlett's Test
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
Bartlett's Test of Sphericity
Approx. Chi-Square
df
Sig.
Source: Field Data 2018
.610
186.210
6
.000
In table 4.7 above, the value of KMO of 0.610 was yielded which suggested that the
sample was adequate for exploratory factor analysis as suggested by (Hooper, 2012)
who argued that KMO should be either .6 or above. On the other hand, Bartlett test in
this study yield p-value =0.00 which signify that the variables are correlated highly
enough to provide a reasonable basis for factor analysis as suggested by (Hooper, 2012)
that the value for Bartlett test should be significance value of less than .05 as describe
above in KMO and Bartlett test table 4.3 above.
4.4 Finding in relation to Objectives
This study had three specific objectives and the aim of the findings is to show if the
objectives were met. The objectives are as follows:
i. To determine proper accounting records to improve the performance of SMEs.
ii. To determine the SMEs performance in preparation of accounting records.
iii. To find out the proper accounting records procedures to improve performance of
SMEs.
34
4.4.1 Proper Accounting Records
This section sought to determine proper accounting records to improve the performance
of SMEs. Results regarding proper accounting records to improve the performance of
SMEs are provided in the table 4.4 below;
Table 4.4: Proper Accounting Records
Proper Accounting
Records
Proper accounting record
brings the improvement in
business
Educational Background in
Record Keeping helps your
business to bring proper
accounting records.
Your business insures that
Dates, Descriptions and
Amounts recorded on Cash
Sales Receipts.
Proper accounting record
helps to provide high profit
and know money circulation
of your business.
Proper records are kept
daily.
Source: Field Data 2018
Strongly Disagree Neutral
disagree
F
%
F
%
F
%
0
0
14 14 13 13
Agree
F
42
%
42
Strongly
agree
F
%
31 31
0
0
5
5
14
14
68
68
13
13
10
10
16
16
18
18
35
35
21
21
20
20
5
5
8
8
37
37
30
30
0
0
49
49
18
18
33
33
0
0
The findings in this objective of the study show that majority of the respondents (73%)
agreed that proper accounting record brings the improvement in business while 81% of
the respondents agreed that Educational background in record keeping helps business to
bring proper accounting records, 56% of the respondents asserted that their business
insures that Dates, Descriptions and Amounts recorded on Cash Sales Receipts. 67
percent claimed that proper accounting record helps to provide high profit and know
35
money circulation of your business while 25 denied it. Additionally, 49 percent denied
that the kept proper record daily.
4.4.2 Preparation of accounting records
Table 4.5 shows the findings with regard to SMEs performance in preparation of
accounting records.
Table 4.5: Preparation of accounting records
Preparation of accounting
records
All Cash Receipts recorded
in the Books of Accounts
All Payments get recorded
into the Books of Accounts
Profit and loss accounting
are normally used in keeping
records in your business.
Financial statement is
prepared if the records are
recorded daily
In your business accounting
record are prepared by
following policy and
procedures.
Source: Field Data 2018
Strongly Disagree Neutral
disagree
F
%
F
%
F
%
17 17 12 12 21 21
Agree
F
36
%
36
Strongly
agree
F
%
14 14
12
12
42
42
18
18
28
28
0
0
0
0
4
4
25
25
42
42
29
29
9
9
6
6
24
24
33
33
28
28
17
17
37
37
16
16
30
30
0
0
Table 4.5 shows that 50 percent of the respondent claimed that all cash receipts are
recorded in the Books of Accounts though 54% of the respondents denied that all
payments get recorded into the Books of Accounts. Majority of the respondents agreed
that profit and loss accounting are normally used in keeping records in your business.
Also 61% of the respondents claimed that financial statement is prepared if the records
are recorded daily and 54 percent of the respondent disagreed that their business
accounting record are prepared by following policy and procedures.
36
4.4.3 Proper accounting record procedures
This section sought to capture different answers on proper accounting records
procedures to improve performance of SMEs. The statement provided to respondents
and the findings are as follow:
Table 4.6: Proper accounting record procedures
Proper accounting record
procedures
Set of procedures help to
minimize record keeping
cost and it develop a proper
record keeping in your
business.
Entrepreneurship seminars
helps to elaborate on how to
keeping records effective.
Proper accounting records
must be supported by such
source of documentation as
cancelled cheque, time and
attendance record.
In your business accounting
records are generated related
to cash requirement and cash
payment date
Cash sources are identified
and determined in your
business
Source: Field Data 2018
Strongly Disagree Neutral
disagree
F
%
F
%
F
%
5
5
24 24 10 10
Agree
F
30
%
30
Strongly
agree
F
%
31 31
10
10
10
10
20
20
30
30
30
30
8
8
20
20
4
4
45
45
23
23
14
14
26
26
8
8
42
42
10
10
18
18
9
9
28
28
24
24
21
21
From Table 4.7 it is evident that majority of the respondents agreed that set of
procedures help to minimize record keeping cost and it develop a proper record keeping
in your business, 60% of the respondents agreed that Entrepreneurship seminars helps to
elaborate on how to keeping records effective and 68 percent agreed that proper
accounting records must be supported by such source of documentation as cancelled
37
cheque, time and attendance record. Also respondents agreed that their business
accounting records are generated related to cash requirement and cash payment date by
52% and 45% agreed that cash sources are identified and determined in your business
4.5 Test of Hypothesis
The study had three hypotheses to test. These were:
H01: There is significant relationship between proper accounting records and the
performance of SMEs.
H02: There is significant relationship between SMEs and preparation of accounting
records and the performance of SMEs.
H03: There is significant relationship between proper accounting records procedures and
the performance of SMEs.
4.5.1 Correlation
Table 4.7 below, the relationship between independent variables and dependent variable
was investigated using Pearson Product-moment correlation coefficient. There was
strong correlation between proper accounting records and the performance of SMEs
[r=0.305**, N=100]. And significant relationship between preparation of accounting
records and the performance of SMEs [r=0.149 **, N=100]. Also, Table 4.7 above
illustrate this relationship in terms of Pearson Correlation coefficient as significant
relationship between proper accounting records procedures and the performance of
SMEs [r=0.547 **, N=100].
Table 4.7: Correlations
Correlations
Proper
Preparation of Proper
Accounting accounting
accounting
Records
records
record
procedures
38
SMES
Performance
Proper
Accounting
Records
Pearson
1
Correlation
Sig. (2.000
tailed)
N
100
Preparation Pearson
.831**
1
of
Correlation
accounting
Sig. (2.000
.000
records
tailed)
N
100
100
Proper
Pearson
.529**
.458**
accounting
Correlation
record
Sig. (2.000
.000
procedures
tailed)
N
100
100
SMES
Pearson
.305**
.149
Performance Correlation
Sig. (2.002
.139
tailed)
N
100
100
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Field Data 2018
1
.000
100
.547**
1
.000
100
100
4.5.2 Regression Analysis
In order for these hypotheses to be tested, three assumptions were considered.
i.
First assumption: Coefficient of determination in the modal summary should
explain the independent variables above 50%.
ii.
Second assumption: At 5% level of significant and 95% confident level, the
significant value (P value) in the ANOVA and coefficient regression should be P
< 0.000-0.05.
iii.
Third assumption: At 5% level of significant and 95% confident level, the value
of predictions or independent variables should be P ≤ 0.000 - 0.05.
39
After analyzing dependent variables and independent variables on SPSS v.23, the
mentioned three assumptions were tested so as to know if the hypotheses hold or not.
First, variables were tested so as to check if coefficient of determination in the modal
summary would explain the independent variables above 50%. After testing them on
SPSS v.23 the results were presented on the table 4.8 below.
The result from table 4.8 below shows that dependent variable “SMES Performance” is
explained well by independent variables “Proper accounting record procedures,
Preparation of accounting records, Proper Accounting Records” to a greater extent as
demonstrated by R Square of 58.5% which is high percent since it exceeds 50%.
Therefore, the first assumption hold which also means hypothesis of this study are
positively correlated since coefficient of determination in the modal summary explained
the independent variables above 50%.
Table 4.8: Model Summary
Model Summaryb
Mode R
R
Adjuste Std. Error Change Statistics
l
Square d R
of the
R
F
df1 df2 Sig. F
Square Estimate
Square Chang
Change
Change e
a
1
.688 .585
.321
1.71813
.342
16.613 3
96 .000
a. Predictors: (Constant), Proper accounting record procedures, Preparation of
accounting records, Proper Accounting Records
b. Dependent Variable: SMES Performance
Source: Field Data 2018
The results provided in table 4.9 below showed that, the model applied in this study
statistically significantly predict the outcome variable of relationship between dependent
variable “SMES Performance” is explained well by independent variables “Proper
accounting record procedures, Preparation of accounting records, Proper Accounting
Records” to a large extent since significant value (P value) is 0.000 which is less than
40
0.05. Therefore, this means hypothesis of this study are positively correlated since at 5%
level of significant and 95% confident level, the significant value (P value) in the
ANOVA and coefficient regression lie between value of P < 0.000-0.05.
Table 4.9: ANOVA
ANOVAa
Sum of
Mean
Model
Squares
df
Square
F
Sig.
1
Regression
147.120
3
49.040
16.613
.000b
Residual
283.390
96
2.952
Total
430.510
99
a. Dependent Variable: SMES Performance
b. Predictors: (Constant), Proper accounting record procedures, Preparation of
accounting records, Proper Accounting Records
Source: Field Data 2018
Table 4.10: Coefficientsa
Coefficientsa
Model
Unstandardized
Coefficients
B
Std. Error
12.205
1.376
.262
.126
1 (Constant)
Proper Accounting
Records
Preparation of
-.183
.074
accounting records
Proper accounting
.279
.050
record procedures
a. Dependent Variable: SMES Performance
Source: Field Data 2018
Standardized t
Coefficients
Beta
8.867
.325
2.077
.000
.040
-.370
-2.483 .015
.545
5.576
The regression equation (Y =O +1X1 + 2X2 + 3X3+) was;
Y= 12.205+-0.262 X1 +-0. 183X2 + -0.279X3 +
41
Sig.
.000
Where by Y = SMES Performance
X1= Proper Accounting Records
X2 = Preparation of accounting records
X3= Proper accounting record procedures
The coefficient table implies that there is a significant relationship between Proper
Accounting Records and Proper Accounting Records as it shows value is 0.040 which is
between P 0.000 – 0.05 and there is significant relationship between Preparation of
accounting records and Proper Accounting Records as it shows value is 0.015 which is
between P 0.00– 0.05 Also there is significant relationship between Proper accounting
record procedures and Proper Accounting Records as it shows value is 0.000 which is
between P 0.00– 0.05.
4.6. Discussion of Findings
These findings are in agreement with empirical studies of Sian and Roberts (2009),
Collis and Jarvis (2002), Evans et al., (2005), Jourbet, P. (2009) and Pillay (2009) from
abroad while; Nkonoki (2010), Kazooba (2006) and Obura (2012) from EastAfrica: they
concluded that one of the major causes of increasing performance of SMEs operations is
presence of keeping the Accounting Records.
According to Oladejo (2008), the achievement of the firm’s objectives is greatly
influenced by the application of accounting records. The findings in this objective of the
study show that majority of the respondents agreed that proper accounting record brings
the improvement in business. Most small businesses in Iringa Municipality still are not
aware of the importance and benefits of accounting records hence they have practice
application of accounting records for the sake of achieving firms objectives.
Majority of the respondents agreed that Educational background in record keeping helps
business to bring proper accounting records, this can supported by findings of
42
Biryabarema (1998) who revealed that accounting knowledge enables small businesses
to have proper accounting records hence accurate information on which to base
decisions. Study findings show that 67 percent of the respondents claimed that proper
accounting record helps to provide high profit and know money circulation of your
business while 25% denied it. These findings support Okoli (2011) who links proper
record keeping and profitability of small scale enterprises and assert that due to
inadequate record keeping, the small scale operators could not assess their performances
effectively. He argues that in order to enhance the profitability of small scale enterprises
and their continuity, there is need for adequate record keeping which will help the
proprietors to keep track of the performance of these enterprises. Also Lakew and Rao
(2013) investigated the effect of accounting record practices on profitability of business
enterprises in the Jimma Town of Ethiopia. They pointed out that the efficiency of
accounting record practices can bring about higher profitability
Fatoki (2012) concluded that, practices recoding business transaction is very weak, this
support findings of this study where by the researcher revealed that majority of the
respondents denied that all payments get recorded into the Books of Accounts. Kengere
et al (2010); their study findings found that the percentage of SMEs that use local
records keeping is big enough and may not be as accurate since they are not are prepared
by following policy and procedures. Respondents of this study disagreed that their
business accounting record are prepared by following policy and procedures.
From Table 4.7 it is evident that majority of the respondents agreed that set of
procedures help to minimize record keeping cost and it develop a proper record keeping
in business, this correspond with Pyons (2009) who asserted that the high incidence of
failure among SMEs could be attributed to the poor accounting systems used by these
enterprises. He recount that since accounting systems play a key role in determining
business growth and profitability, there is a need to evaluate the accounting procedures
and systems used by SMEs. This is important because for optimum business growth,
43
SMEs must make use of procedures and system of accounting which will enable them
determine the proper record keeping in business as well as volume of sales, profits (or
loss), assets and liabilities at any given time.
The researcher found that Entrepreneurship seminars help to elaborate on how to
keeping records effective. Adam (2010) on his study suggests that SMEs to attend
entrepreneurship seminars and short courses whereby they was able to gain knowledge
on accounts record keeping. Moreover study findings revealed that cash sources are
identified and determined in your business, but still according to Clelland (1961) the
entrepreneurs regardless of the size of their businesses fail to identify and determine
cash sources.
4.7 Chapter Summary
This chapter presented and explained data obtained during the study based on research
questions, specific objectives and hypotheses. Tables and figures were used to present
findings. Quantitative data was used to assess the contribution of accounting records on
the performance of Small and Medium Enterprises in Tanzania, a case study of Iringa
Municipality. Hypothesis was than tested and it was found that there is positive
relationship between independent variables and dependent variable. The chapter finally
ends by making discussion of the findings whereby finding of various previous
researchers were compared to the findings of this study.
44
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction
This chapter presents the summary conclusions and recommendations of the study on
the contribution of accounting records on the performance of Small and Medium
Enterprises in Tanzania, a case study of Iringa Municipality
5.2. Summary
5.2.1 General Summary
The main purpose of this study was assess the contribution of accounting records on the
performance of Small and Medium Enterprises in Tanzania, a case study of Iringa
Municipality. The study answer three specific research questions which are: (i) to what
extent do proper accounting records improve the performance of SMEs? (ii) To what
extent SMEs perform in preparation of accounting records? And (iii) to what extent the
proper accounting records procedures improve the performance of SMEs?
The study employed quantitative approach, informed by descriptive research design. The
simple random sampling and purposive sampling techniques were employed to obtain
the respondents. Mainly the respondents were small business and entrepreneurs of
Iringa Municipality. The sample comprised of 100 respondents. Data was collected
through questionnaires. The quantitative data were processed with the help of Statistical
Package for Social Science (SPSS) software program version 22 and were summarized
in tables of frequencies percentages, correlations, t-tests and charts.
5.2.2
i.
Summary of Findings
Proper accounting records
Findings on the proper accounting records revealed that most small businesses are still
not aware of the importance and benefits of accounting records hence they have practice
45
application of accounting records for the sake of achieving firms objectives. Hence the
researcher findings revealed that accounting knowledge enables small businesses to have
proper accounting records hence accurate information on which to base decisions.
Therefore keeping records is crucial for the successful performance of a business. A
comprehensive record keeping system makes it possible for entrepreneurs to develop
accurate and timely financial reports that show the progress and current condition of the
business.
ii.
Preparation of accounting records
The objective was to determine the SMEs performance in preparation of accounting
records. 50 percent of the respondent claimed that all cash receipts are recorded in the
Books of Accounts though 54% of the respondents denied that all payments get recorded
into the Books of Accounts. Records are kept on cash basis. Sales, purchases, creditors
and debtors, Receipts, invoices, payment vouchers are used as record keeping
documents which help to reduce operating costs, improves efficiency and productivity.
Also 61% of the respondents claimed that financial statement is prepared if the records
are recorded daily and 54 percent of the respondent disagreed that their business
accounting record are prepared by following policy and procedures
iii.
Proper accounting records procedures
It is evident that majority of the respondents agreed that set of procedures help to
minimize record keeping cost and it develop a proper record keeping in your business
and 68 percent agreed that proper accounting records must be supported by such source
of documentation as cancelled cheque, time and attendance record. Adherence to
internal controls as laid down by management (even if guidance is obtained from
professional accountants) is crucial to maintaining integrity of records. The roles of the
professional accountant as consultants/part-time accountants are of immense value to
entrepreneurs on how best to manage their business organizations for great results.
46
5.3 Implication of Findings
5.3.1 SMEs
It is a known fact that, if the businesses grow, they will employ many people, they will
produce quality goods and services and they will formalize and thus pay taxes,
contributing to growth and reduction of poverty. Each SME owner, trader, supervisor
should make sure that he or she is aware of the importance of accounting records
towards the business growth. They should involve themselves in participation of
different entrepreneurship seminars which elaborate on keeping accounting records
5.3.2 Policy Makers
The accounting ideas are relevant to SMEs but that a process of innovation combining
both knowledge to overcome a barrier of belief and an external shock are necessary in
order for innovation to take place. Preservation of the accounting records is important
then, its use does support business growth. The government and policy makers have to
provide special program that will influence SME’s innovation on the use accounting and
financial procedures.
5.3.3 Learning institutions
In learning institutions, they should have entrepreneurship course in their curriculum in
form of both theory and practical. This would help on the preparation of the students
towards a practical side on how to start and run their own business entities. In this course
there should be a subject on record keeping, in which it would be used as one of the way
to guide the students on how to manage and control finances including minimizing
expenditures. This generally leads to a better business performance by helping the
students in operating their business with the knowledge of expanding the business rather
than sending their profits.
47
5.3.4 Business Owners
SME owners should be motivated to participate in different business matters, let it be
seminars, international meetings, conferences where they can get different information,
business skills on how to manage the business
5.4 Limitations of the Study
Presence of SME owners; SMEs traders are known to be very busy, it was difficult for a
researcher to get their attention regarding all questions that the study needed answers to.
5.5 Conclusion
Most small businesses in Iringa Municipality still are not aware of the importance and
benefits of accounting records hence they have practice application of accounting
records for the sake of achieving firms objectives. According to the findings presented
and discussed, this study concluded that accounting records are used to assess the
profitability of alternative courses of action, measure performance, and evaluate the
position of enterprises in term of profitability, liquidity, activity and leverage. It can be
used to improve SME performance, especially financial decisions. Findings showed that
there is a strong positive relationship between accounting record keeping and
performance of small scale enterprises. This implies that accounting record keeping
affects performance of small scale business. Accounting record keeping is essential for
decision making. Business adjustment and records also help to improve business
efficiency and productivity for effective business performance. It was also found that
Accounting records keeping increase the chances of the business operating and
achieving success, and provide information to enable the control of cash in the business
48
5.6 Recommendation
5.6.1 Recommendations for Action
From findings, the study recommends that entrepreneurs should be equipped with good
and relevant business financial and managerial skills to make decisions for their business
sustainability.
The owner of small business should make efforts to equip themselves with good and
relevant business skills by devoting some time for levering from various sources of
information and business education; business training, workshop and seminar on
entrepreneurs and businesses establishment.
Small businesses entrepreneurs should recognized the presence and the services of
business lawyers, accountants and other professions should be widely used to enhance
efficiency in the business.
5.6.2 Recommendations for Future Research
To further support the management and growth of the SMEs this study suggests that:
i.
There is need to carry out a study of this kind but targeting the medium entities
only. Given that the need for accurate account recordkeeping increases with the
expansion of growth in size of a business there is a need to find out how the
medium enterprises are performing in terms of the recordkeeping.
ii.
Training of managers or owners of SMEs on the account recordkeeping skills is
emphasized in this study. In rue of this, this study suggests that a research be
conducted to find out the best way to approach the training or to come up with a
training programme for these entrepreneurs which will not disrupting the
operation of their businesses.
49
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52
APPENDICES
APPENDIX 1: LETTER FOR DATA COLLECTION
I’m Janepher Maliwa, a student from Ruaha Catholic University (RUCU). I am doing
research on Assessment of the contribution of accounting records on the performance of
Small and Medium Enterprises in Tanzania, a case study of Iringa Municipality, and
therefore the purpose of this questionnaire is to capture information that will reflect the
study topic at Iringa Municipality in particular as a study area. I kindly ask you to assist
me in my study by answering the following questions. I assure you that your information
was kept confidential.
For further inquiry, please contact me at
Mobile – 0689 904 198,
E-mail: jenifermaliwa@gmail.com
53
APPENDIX II: QUESTIONNAIRE
PART A: DEMOGRAPHIC INFORMATION (Tick the appropriate answer)
Business Identification
1. Location of Business ……………………………………..................................
2. Name of your Business......................................................................................
3. Gender
i. Male ( )
iii.
Female ( )
4. Marital status
i.
Single ( )
iii.
Window ( )
ii.
Married ( )
iv.
Divorced ( )
5. Your education level
i.
Primary ( )
iii.
Degree ( )
i.
Secondary ( )
iv.
Master ( )
ii.
Diploma ( )
6. Age of the respondent (years)
i.
18-25 ( )
iii.
31-40 ( )
ii.
26-30 ( )
iv.
41 and above ( )
7. Type of Ownership
(i) Individual ( )
(iii) Agency ( )
(ii) Partnership ( )
8. How did you get Capital to start your Business?
(i) Own Money/Family ( )
(iii) Microfinance company (
(ii) Friends ( )
(iv) SACCOS ( )
54
PART B: SPECIF QUESTIONS
The following part seeks assess the contribution of accounting records on the
performance of Small and Medium Enterprises in Tanzania.
Please choose the item that you want and then circle it.
1=strongly disagree 2= Disagree 3=Neutral 4=Agree 5=strongly agree
QN
W1
W5
Proper Accounting Records
Proper accounting record brings the improvement in your
business.
Educational Background in Record Keeping helps your
business to bring proper accounting records.
Your business insures that Dates, Descriptions and Amounts
recorded on Cash Sales Receipts.
Proper accounting record helps to provide high profit and know
money circulation of your business.
Proper records are keeping daily.
QN
Q1
Preparation of accounting records
All Cash Receipts recorded in the Books of Accounts
1 2 3 4 5
Q2
All Payments get recorded into the Books of Accounts
1 2 3 4 5
Q3
Profit and loss accounting are normally using in keeping 1 2 3 4 5
records in your business.
Financial statement is prepared if the records are recorded daily 1 2 3 4 5
W2
W3
W4
Q4
Q5
QN
A1
A2
A3
A4
In your business accounting record are prepared by following
policy and procedures.
Proper accounting record procedures
A set of procedures help to minimize record keeping cost and it
develop a proper record keeping in your business.
Entrepreneurship seminars helps to elaborate on how to keeping
records effective.
Proper accounting records must be supported by such source of
documentation as cancelled cheque, time and attendance record.
In your business accounting records are generated related to
cash requirement and cash payment date
55
OPTIONS
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
A5
Cash sources are identified and determined in your business
QN
A1
Small and Medium Enterprises Performance
SMEs performance brings the ability of the business to meet the 1 2 3 4 5
required standard, improve facilities and ensuring the return on
profitability.
SMEs focus on day to day operation.
1 2 3 4 5
A2
A3
A4
A5
1 2 3 4 5
A set of accounts are kept completely so that to capture sales 1 2 3 4 5
and cost
In your business accounting records are maintained in long term 1 2 3 4 5
sustainability.
Enterprise's transactions disclose with reasonable accuracy
1 2 3 4 5
56