Company accounts preparation and financial performance of small & medium scale enterprises in Nigeria

Abstract

The importance of keeping company accounts is to promote the growth evaluate the performance of
small and medium scale enterprises (SMEs). Many business entities collapse few years after their incorporation
due to poor management arising from weak accounting structure. This study, therefore, examines
the relationship between company accounts preparation and the financial performance of SMEs in Nigeria.
The study adopts a survey research design. The sample size of 380 respondents was drawn from 20
selected SMEs using a purposive sampling technique. Primary data was collected by administering questionnaire
to SMEs operators. Multiple Regression model and correlation analysis were employed to analyze
the data. The results of data analysis confirm a strong positive relationship between the company
accounts preparation and the financial performance of SMEs in Nigeria. This was established from the
p-value of 0.00 which is less than 0.01 significant level (0.00 < 0.01). This study concludes that, the
adequate company accounts preparation will reflect financial performance of SMEs in Nigeria. This study
discovers that some SMEs operators in Nigeria hired unskilled accounting personnel making it difficult
for them to prepare reliable annual accounts and reports. This study, therefore, recommends that the
SMEs operators in Nigeria should be maintaining proper accounting records of their operations and hire
experienced accounting personnel. Findings from this study will gear up the SMEs operators to appreciate
the need to adequately prepare reliable company accounts that will reflect the financial performance
of their businesses.
Key words: Company accounts preparation, financial performance, SMEs.