THE ROLE OF FINANCIAL ACCOUNTING IN A SMALL SCALE BUSINESS

TABLE OF CONTENTS

CHAPTER ONE

1.1      INTRODUCTION

1.2      STATEMENT OF THE PROBLEM

1.3      OBJECTIVE OF THE STUDY

1.4      REVENUE OF THE STUDY

1.5      SCOPE OF THE STUDY

1.6      RESEARCH METHODOLOGY

1.7      PLAN OF THE STUDY

CHAPTER TWO

LITERATURE REVIEW

2.2      BASIC ACCOUNTING RECORDS

2.3      ACCOUNTING PERSONNEL AND EQUIPMENT

2.4      RELATIONSHIP BETWEEN COST ACCOUNTING AND FINANCIAL ACCOUNTING

2.5      HISTORICAL BACK GROUND OF THE CASE STUDY FAS SUPERMARKET

CHAPTER THREE

RESEARCH METHODOLOGY

3.1      ACCOUNTING PRACTICES IN THE SUPERMARKET

3.2      ACCOUNTING BOOKS IN THE CASE STUDY COMPANY

3.2      (Weakness Observed).

3.3      ACCOUNTING PERSONNEL AND EQUIPMENT UTILITIES

3.4      METHOD OF DATA COLLECTION

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1      DATA ANALYSIS

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1      SUMMARY

5.2      CONCLUSIONS

5.3      RECOMMENDATIONS

REFERENCES

CHAPTER ONE

1.1   INTRODUCTION

        In running a business whether a small scale or large scale, there has always been a need to achieve the best business decisions by example all available alternative courses of action.

        All these business decisions are based on records of financial activities which have been undertaken to a considerable extent, to project the future of the business with these records.

        These serve the purpose of the several parties, e.g. investors, government, general public who may not be involved in the management of business, but will be interested in the out come of the management actions especially in financial aspect.

        This chapter is concerned especially with the role of accounting as means of diving information, with relevant attention to small scale business, as well as small-scale business characteristic, and lastly, the role of accounting personal in the business.

1.2   STATEMENT OF THE PROBLEM

        Patronage is a problem usually encountered by business such as the case study. This is usually due to inability of prospective customers to bargain price, which is a common practice in Ilorin, in order to pay the amount that favours them. Moreover, there is generally high cost of goods and services and this diversely affects FAS supermarket limited, because there are other expenses which it incurs to make good available thereby making the selling price higher.

        Also, capital of the company is insufficient for it to create multiple sales outlets in other to increase sales, or diversity.

        Finally, pilferage is a common phenomenon in the company and there is need for provision of security to prevent these eventually economic losses.

1.3   OBJECTIVE OF THE STUDY

                The sole aim of the project is to examine problems of financial accounting in a small-scale business are to be looked at, the causes of those problems, and to suggest an appropriate solution to each problem discussed. And finally to weigh the value or appouse the role that financial information plays in eradicating or eliminating these problems.

        The following things should be known under the objectives:

i.            To ascertain the level of personal in this company (Accounting personnel) and see whether the financial activities of these personnel correspond with the laid down rulers of accounting.

ii.          To make recommendation on what to do to remove or remedy the weaknesses identified in the small-scale business organization.

iii.        To ascertain the role of financial data in a small business concern, so as to make a lasting suggestion in respect of the information.

iv.         To identify financial documents not being kept in the company’s books which are of substantial importance of them.

v.           To observe practically, the problems faced by financial accounting in a small – scale establishment (FAS supermarket).

1.4   REVENUE OF THE STUDY

        It is common among small-scale business to be adamant in keeping accounting records some usually claim to know the “in and out” of their business but it is equally now well known, that keeping such records is economical and it is a necessary for the successful management of a business, because it serves a basic tool where by the best business decision can be made.

        It helps to identify amounts receivable and payable on credit sales and purchases respectively, and the time when it is done. It is also good in identifying, in case of diversity the vate of individual working efficiency and rates of sales at each selling points, to help determine for instance where proper attention of business marketing should be focused.

        It helps to determine the resultant cost of running business daily and periodically, it informs the business owner of period of when the highest sales could be achieved.

        Deductions such as taxes (Personal income) and depreciation of assets are determined more accurately. This later aspect is indirectly instrumental to reducing high cost of operating machines, when the information on record are well managed.

        Inventory or stock and their level can be controlled and replenished; with accounting record control can also be placed on rate of credit sales or credit purchases at any given time.

        Keeping good accounting records helps a business enterprise to establish a four profit basis for the business.

1.5   SCOPE OF THE STUDY

        The company’s accountant did not keep to appointment and as a result much money was spent for transportation to and for until he finally gave us the detail of the interview.

        Also the company restricted the researcher to the subsidiary books alone.

        They did not allow a glance through the main cash book of the company. This was not released to the researcher; she was only allowed to interview the accountants who give a brief introduction about the system of the accounting adopted in the company.

1.6   RESEARCH METHODOLOGY

        This explains the types of methodology use in collection of information from the case study, as well as for the project as a whole.

        For the case study company, there are two approaches used as the method of collecting information i.e. interviewing the accountant and direct observation.

        In the first instance there was a personal discussion with the general manager, who is the son of Alhaji FA Sadiku to seek for permission in his company. He was informed of the topic and the reason for choosing his company as the case study.

        He granted the permission after the discussion and he referred the researcher to the company accountant.

        On getting to the accountant he conducted an interview that would consist of all necessary information that he would need to answer concerning the method of account operating in that point in time.

        The interview as prepare and gathered together then asks him to com back about three days later for the proper interview.

        Then the accountant was interviewed on the books they kept and other relevant information that would help about the company. He showed the necessary books they kept (the three books mentioned already) and the researcher could gather some facts in the physical evaluation of the system.

        Also reading in the library to make a full research was added to the two methods used in collecting information for the project.

1.7   PLAN OF THE STUDY

        The researcher work is on the application of accounting system in small-scale organization, in order to ease the write-up it is divided into five chapters and they are as follows:

-              Chapter one: this contains the introduction, statement of the problem, objective of the study, relevance of the study, scope of the study, research methodology and plan of the study.

-              Chapter two: reviews the methods accounting in a small – scale organization its basic record accounting personnel and equipment relationship between cost accounting and financial accounting and the historical background of the case study (FAS supermarket limited)

-              Chapter three: include the research in accounting practices in the case study (FAS supermarket limited) and accounting books in the company and accounting personnel equipment together with data collections.

-              Chapter four-this contains the data analysis and findings.

-              Chapter five: contain the summary, conclusion and recommendation drawn from findings on accounting system of small-scale organization.