This study is to examine the relevance of accounts
department in a small and medium business enterprise (Using some selected SME’s
in Etsako West Local Government Area as a case study). In this study, the
extent to which the presence of the accounts department is being felt in an organization
and the significant role between the accounts department and the management of
the organization was looked at. The research also examines the relationship
between the accounts department and the various departments of the organization
and how their activities are co-ordinated to achieve the overall objective of
the organization. The study also seeks to find out the problems encountered by
the accounts department in the course of carrying out their operations and how
it can be resolved. Relevant journals, textbooks and related work on the
relevance of accounts department in small and medium scale business enterprises
written by different authors were consulted. The stratified random sampling
technique was used and questionnaires and personal interview were the research
tools used in collection of vital information and the method of data analysis
adopted was the chi-square method of data analysis. Some of the result from the
research was that the accounting personnel are honest in terms of keeping the
books of accounts of the organization, the accounts department does not fulfill
its obligation of preparing and publishing regular information to third
parties, the accounts department assist the organization in carrying out
research and development for new improved methods etc. The following
recommendations were also arrived at; regular accounting information should be
published and made available to third parties, incentive measures be put in
place to compensate workers so as to reduce the issue of fraud in the
organization, there should be a good working relationship between the
accountant and the management of the organization etc.
Title Page i
1.1 Background to the study 1
1.2 Statement of problem 2
1.3 Research questions 3
1.4 Objectives of the study 4
1.5 Research hypothesis 5
1.6 Significance of the study 5
1.7 Scope of the study 7
1.8 Limitation of the study 8
1.9 Definition of terms 8
Two: Review of Related Literature
2.1 The Contributions of the Accounts Department in the
Profit Planning of an Organization 11
2.2 The Accounting System 12
2.3 Fundamental Accounting Concepts and Conventions 15
2.4 Financial Planning 19
2.5 Cash Management 20
2.6 Material Control/Management 21
2.7 General Nature of Accounts Department 23
2.8 Types of Accounting Records/Books and their Usefulness 25
2.9 Bank Reconciliation Statement 29
2.10 The Role of Accounts Department n an Organization 30
Three: Research Method and Design
3.1 Introduction 31
3.2 Research Design 31
3.3 Description of Population of the Study 32
3.4 Sample Size 32
3.5 Sampling Techniques 33
3.6 Sources of Data Collection 33
3.7 Method of Data Presentation 34
3.8 Methods of Data Analysis 35
Four: Data Presentation, Analysis and Interpretation
4.1 Introduction 37
4.2 Presentation of Data 37
4.3 Data Analysis 38
4.4 Hypothesis Testing 45
Five: Summary of Findings, Conclusion and Recommendations
5.1 Introduction 52
5.2 Summary of Findings 52
5.3 Conclusion 54
5.4 Recommendations 55
Appendix I 60
Appendix II 61
1.1 Background to the Study
The word “Account” as defined in Oxford
Advanced Dictionary is a written record of money that is owned to a business
and of money that has been paid by it.
An account department is one of the
different divisions into which organizations activities are assigned for
effective performance so as to achieve desired objectives.
The accountants and the accounting
clerks are the account personnel that make up the account department. In most
organizations, it has been observed that more often than not, the account
department is not appreciated. The researcher have observed that in the past,
companies without reliable accounts department always fold up because they
cannot ascertain their revenue and expenditure. The situation is the same
whether the business organization is small or often associated with organizations
without efficient accounts department.
For an organization to be financially
operative, all other departments of the organization must be accountable to the
accounting department of the organization so as to achieve financial prudency.
1.2 Statement of Problem
Over the years, there has been the
problem of ascertaining the importance of accounts department in any organization.
The lack of capable and honest accounting personnel has a negative effect to
the proper account of an organization. Hence, this research is in view of
finding the important role of the accounts department in an organization.
Moreso, suggesting some remedies on the
incompetency on the part of the personnel in the collection of information and
preparation of the financial statements to the various shareholders or general
public to use or work with. Meanwhile, there are numerous problem which will be
looked into; this include among others the ineptitude (lack of required and
necessary skills) on the part of the accounting clerk who is appointed to keep
records of various expenses and receipt incurred by the organization, but due
to the boring nature of the work, he/she tend to post erroneously thereby
creating an avenue for overcastting or undercasting of the account. Hence,
there is need to motivate them with proper incentives so as to bring out the
best of the accounting clerk.
1.3 Research Questions
Based on the problem stated above, the
following research questions were formulated.
Are the accounting personnel honest in
terms of keeping the books of account of the organization?
Has there been any significant
contribution of the accounts department in the planning of the organization?
Has the department been efficient in
reconciling the cash book and the bank statement at times of disagreement?
Has the presence of the department led
management in developing and attaining the purpose of the organization?
Is the budgets prepared by the accounts
department been able to achieve financial prudence.
1.4 Objectives of the Study
The objective of this study is to
uncover or find out:
If the accounting personnel are honest
in terms of keeping the books of account of the organization.
If there is any significant contribution
of the accounts department in the planning of the organization.
If the department has been efficient in
reconciling the cash book and the bank statement at times of disagreement.
If the presence of the department has
led management in developing and attaining the purpose of the organization.
If the budget prepared by the account
department have been able to achieve financial prudence.
1.5 Statement of Hypothesis
According to the Oxford Advanced
Learners’ Dictionary, hypothesis is an idea or explanation of something that is
based on a two known facts but that has not yet been proved to be true or
(Null): There is no
significant difference between organizations without accounts department and
organizations with accounts department.
is a significant difference between organizations without accounts department
and organizations with accounts department.
1.6 Significance of the Study
The importance of accounts department
cannot be over emphasized when viewed from the point that accounting personnel
supply information that are relevant to various bodies and institutions such
accounts department supplies management with information that helps management
in planning and controlling routine operations for strategic decisions and
formulation of major policies. It is also needed to enable management make
decisions concerning the past, present and future of the organization. Timely,
complete and regular financial information is also needed to enable management
of organizations to monitor performance and compare actual performance with
planned objectives so that necessary corrective actions are taken.
Financial information supplied by the accounts department is also needed by
shareholders to enable them know if the organization is properly runned, managed by the managers in terms of profit
maximization so as to know if they will receive their dividend as at when due
and therefore continue to invest in the organization or not.
who want to become potential shareholders also need the information of the
accounts department to make that important decision of whether to invest their
money in that organization or to take their money elsewhere where proper
accounts can be given and dividend declared in terms of money invested.
Employees in the organization are also supplied with information regarding the
financial position and profitability of the firm as this would influence the
trade union negotiations demand for improvement in employees remuneration and
Government as well as the society
at large, also requires the financial information supplied by accounts
Therefore, the accounts department is of
great importance since it supplies all accounting information to end users for
various and different purposes.
1.7 Scope of the Study
The research work is limited to:
Small and medium enterprises.
It is to be carried out for a period of
six months (that is, from May – October) 2014.
The participants are drawn from the
staffs of winners bakery (Auchi) and Auchi Poly bakery.
The research work is to be carried out
in Etsako West Local Government Area.
1.8 Limitations of the Study
Response of study participants: Having
to get response from the staffs of the different enterprises with different
level of understanding was a limitation.
Secret: There was also the problem of
secrecy among participants who found it difficult to release some vital
1.9 Definition of Terms
This has been variously defined as the process of identifying, generating,
collecting, measuring and communicating of economic and financial information
to enable intelligent judgement and decision by users of such information.
Personnel: They are accounting staff or persons
employed in an organization with the qualification of carrying out accounting
duties. They consist of accountants and clerks.
This is a system, body or society consisting of parts acting in coordination
and having the unified whole engaging in rendering its services with a focus of
achieving its aims of operation.
Ledger: This is a book where transactions are recorded on
purchases involved by the organization with other company.
Day Book: This is the book where transaction executed by the
company on credit basis is recorded in every day basis.
Book: This is a book where transactions between the
organization and its creditors (that is, those the organization are owing as a
result of its transactions) are recorded.
This is when financial records are willfully or unintentionally increased due
to mistakes in recording the transaction.
These are either individuals or government bodies who might be interested in
the financial transactions of an organization.