Accounting Record-keeping in Small and Medium Enterprises in Nigeria: A Source of Enhanced Business Performance

Abstract

The study examined the influence of accounting record-keeping on the business performance of Small and Medium Enterprises (SMEs) in Nigeria. The specific objective was to determine the extent to which SMEs in Nigeria keep accounting records of their business activities; and to ascertain the extent to which the accounting records of SMEs in Nigeria improve their business performance. Survey research design was adopted in the study. The target population for this study comprises 670,447 SMEs operating across Nigeria. A sample size of 278 respondents was selected across the geopolitical zones of Nigeria. Structured questionnaire was used to collect primary data for the study. Reliability was assessed using Cronbach’s Alpha to determine the internal consistency of the items under each variable. The responses to the research questions were analysed using frequency distribution. The first hypothesis was tested using the Chi-square test to determine whether the extent of accounting record-keeping among SMEs is significantly low or otherwise. The second hypothesis was tested using simple linear regression to evaluate whether accounting record-keeping significantly improves business performance. The study found that: SMEs in Nigeria keep accounting records to a large extent (χ² = 96.593; p = 0.000); accounting record-keeping of SMEs in Nigeria significantly improves their business performance (β = 1.138; p = 0.000). In conclusion, businesses that prioritize proper accounting practices are more likely to achieve financial stability and growth. The study recommends that SME owners and managers in Nigeria should institutionalize comprehensive accounting record-keeping systems within their businesses as well as incorporate detailed financial tracking methods that align with international standards.