1.1 BACKGROUND OF THE STUDY
An accounting information system (AIS) is a system of collecting, storing and processing financial and accounting data that are used by decision makers. It is a system that is generally a computer-based method for tracking accounting activity in conjunction with information technology resources.
Accounting is the language of business that can tell with reasonable accuracy the degree of success an organization has achieved in approaching its financial goal of profit. Accounting system can be defined as records, procedures, and equipment that routinely deal with the events affecting the financial performance and position of the organization, (Horngren and Foster, 1975). The accounting system entails repetitive voluminous transactions which generally fall into cash disbursement, cash receipts, purchases and sales, services including employee payroll.
The purpose of accounting systems is to provide an orderly method for gathering and organizing information about the various business transactions so that it may be used as an aid to management in operating the business, (Copeland and Dascher, 1978).
Small scale enterprises have been defined in various ways according to the capital of the enterprise, size, the number of people employed by the enterprises, the ownership and management of the enterprises and sales volume. Small scale enterprises according to Omorodion (1989) are very important to nations. They are catalysts for industrialization. This is because they provide raw materials for medium and large scale enterprises. They also provide employment opportunities for large segments of the population.
For the small scale enterprises to efficiently play the mentioned roles there should be an orderly method for gathering and organizing information about the various business transactions. This can only be done by the use of adequate accounting system.
Basically, there are two types of accounting systems commonly in use, namely, single entry and double entry system. These could be operated manually or computerized (Baumback, 1983). The single entry accounting system according to Osuala (1993) is the easiest accounting system to operate. The system records the flow of income and expenses through the business on daily summary of cash receipts, a monthly summary of cash disbursements. In single entry book-keeping there might be single aspects of certain transactions and no record at all of some.
Generally, there are rough records of cash received and paid, and of sundry debtors and creditors. Transactions are exchange of values. For every value received, there is an equal value parted with. It is obvious, therefore, that a transaction has a double effect-receiving of value and giving out value. This method is known as double entry book-keeping method. Double entry bookkeeping according to Passion (1989) does not mean recording twice but instead, it means that every entry or recording of transaction has two parts- a left side and a right side. The left side in the accountant’s language is a debit and the right side, a credit when applied to a transaction, the value received is a debit and the value parted with a credit.
1.2 STATEMENT OF THE PROBLEM
The essence of setting up a business organization is to make profit. Goods and services are normally the means of making profits. Without profit, a business is bound to fail. In the process of planning for profit, financial data are assembled in a way that can help make informed judgment and take decisions concerning the organization. An accounting system is one of the most effective decision making tools of management. It provides an orderly method of gathering and organizing information about the various business transactions so that it may be used as an aid to management in operating the business (Copeland and Dascher, 1978).
The high incidence of failure among the small scale enterprises in Nigeria necessitated the study. The failures are attributed to the poor accounting systems used by these enterprises, (Ofonagoro, 1983). Since, accounting system used by an enterprises is one of the key things that determine business growth and profitability, there is need to evaluate the accounting systems used by small scale enterprises in Uyo, Akwa Ibom State. This is important because for optimum business growth, small scale enterprises must make use of a system of accounting which will enable them determine the volume of sales, profits/losses, assets and liabilities at any given time.
1.3 OBJECTIVES OF THE STUDY
The objectives of this study are to find out the following:
i) To examine the impact of accounting information in the growth of small and medium business in Uyo.
ii) To ascertained the types of accounting systems available to small scale enterprises.
iii) To determine the extent the accounting systems enhance small scale enterprises profitability.
iv) To ascertained the problems that hinder the utilization of accounting systems by small scale enterprises operating in Uyo.
v) To make useful recommendations based on research findings.
1.4 RESEARCH QUESTIONS
The following research questions were stated to guide this study:
i) Does accounting information impacted in the growth of small and medium business in Uyo?
ii) What are the types of accounting systems available to small scale enterprises?
iii) To what extent does the use of accounting systems enhance the profitability of the small scale enterprises?
iv) What are the problems that hinder the utilization of the accounting systems by small scale enterprises?
1.5 RESEARCH HYPOTHESES
H0: There is no significant difference between accounting information and the growth of small and medium business in Uyo.
H1: There is a significant difference between accounting information and the growth of small and medium business in Uyo.
H0: The use of accounting systems does not enhance the profitability of the small scale enterprises in Uyo.
H1: The use of accounting systems enhances the profitability of the small scale enterprises in Uyo.
1.6 SIGNIFICANCE OF THE STUDY
In this study, the researchers have set out to examine the impact of accounting information in the growth of small and medium business in Uyo using Super Phone Nig. Limited, Uyo with the aid of highlighting the inherent problem encountered in the small and medium scale enterprises in Uyo. It is expected that this work will be of interest to the managers of company, owners of business enterprises, the government, students and the general public.
To shareholders, owners of enterprise, interested persons and the government, this study is expected to enkindle their interest the more and they will take note of various recommendations mentioned here and help steer the management team towards forming and maintain effective organizations to present and accurate financial information of their firm.
This study will also help to serve as literature (reference source) to students, individuals or corporate bodies into what to carry out on further research on the impact of accounting information in the growth of small and medium business.
1.7 SCOPE OF THE STUDY
The study concerns with the impact accounting information in the growth of small and medium business with a particular reference to Super Phone Nig. Limited, Uyo.
1.8 LIMITATION OF THE STUDY
The limitation of this study was inability of management to divulge certain information which they consider sensitive and fear of publication which might be detrimental to their operation. Also, the outright inability of some respondents to complete and return the questionnaire to the researcher is one of the limitations of the study.
Another limitation to the study was traffic congestion for the researcher to meet them in their offices and for possible return of the questionnaire.
Finally, the researcher observed the non-cooperative attitude of some workers of the company to make information available for her.