CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Small-scale business, small-scale industry and small-scale entrepreneurship are used interchangeably to mean a small-scale industry firm. Its deliberation was to refer to the operational definition. Therefore, small businesses are common in many countries, depending on the economic system in operation. A reasonable number of business establishments for instance, small-scale enterprise of different sizes and nature in Nigeria at large and Benue State in particular have accounting system of recording their business transactions.
There is no universally accepted definition of small-scale enterprise (S.S.Es) because; the classification of business into small or large scale is subjective. Rather, each country tends to define this category of enterprises depending on the scope and range of activities covered by them and the amount of capital required of them to finance their operations in a particular market economy they are set up particularly, the level of a country is development largely determines the scope and range of activities and the capital base requirement of the small-scale enterprise operating therein.
In countries such as Nigeria, United State of America, Britain and Canada, small-scale business in defined in terms of annual turnover and the number of paid employees. In Nigerian for instance, the definition of small-scale enterprises has varied from time to time and according to institution as in other countries.
Therefore, according to Bukola Oriole October 27, 2011 small-scale business in Nigeria is a common means by which many are making a living in the country known as the most populous country in Africa with about 30 million people, Nigeria (turns out graduates from territory institutions with little or no jobs waiting for them in the labour market. Many therefore, turn to the establishment of small-scale business to sustain themselves. However, many who do not have formal education but are business-minded are finding their way into the small-scale business as well.
Also, small-scale enterprise is defined by several ministry of industry as “every manufacturing, processing and/or service industry with a capital not exceeding N200,000 in machinery and equipment alone and maximum of 50 employees either paid or unpaid apprenticeship.
The national council of industry advance the definition of small-scale enterprise as an enterprise with total cost (including cost N50 million with labour size of between eleven and one hundred workers).
Section 6 of the bankers, committee guideline for beneficiaries of Small and Medium Enterprise Equity Investment Scheme (SMEEIS) proffered the following definition of small and medium industry in 2001. “a small-scale and medium industry is defined as any enterprises with a maximum asset base of N200 million excluding loan and working capital and with the number of staff employed by the enterprise not less than 10 and not more than 300”.
It can be seen from above that, in Nigeria the definitions of small-scale enterprise are based o the inclination and objectives of the author or agency and it is likely to be over taken by the dynamism of the economy.
In the United States, the small business administration establishes small business size standards on an industry by industry basis, but generally specified a small business as having fewer than 500 employees for manufacturing business and less than $7million in annual receipts for most nonmanufacturing business.
In Britain for instance, a small-scale business is defined as “that industry with an annual turnover of £2million or less with fewer than 200 paid employees.
Furthermore, an accounting system consist of business papers, records and the procedures that are necessary in recording transactions in form of documents, books of original entry actual book of account and computer file. The operation of an accounting system consists of three (3) basis phases: input, processing and output. Transactions are recorded as they occur on numerous business forms such as sale invoice, purchase involve, bank deposit and payroll cards. This document serves as an input into the computer or some types of journal as a chronological record of the transactions. Financial reports such as income statement, balance sheet and other special report are prepared form the data in the general ledger as output from the system.
From the basis of it operation, accounting system can take many form ranging from simple manual to sophisticated computerized system. On the basis of principles, accounting system take the farms of double entry system ad single entry or incomplete record system. While, on the procedures they follow the basic accounting concept and conventions.
However when an effective and efficient accounting system is put in place and judiciously used, entrepreneurs of such entities may be able to answer such question as:
How much cash does the business have?
How much money does customer owe?
How much money does the business owe?
What is the value of stock in hand? among others. From the foregoing, one can now appreciate the importance of an accounting system and the need for each entity to put in place an efficient system of accounting.
