Effect of Small Accounting Practices on the Performance of Micro And Small Enterprises In Nakuru Central Business District

Abstract

The purpose of the study was to investigate the effect of small accounting practices on the performance of Micro and Small-sized Enterprises (MSEs). The general objective of the study was to determine the effect of small accounting services on the performance of MSE's in Nakuru Central Business District. The specific objectives of the study were; to examine the effect of bookkeeping on the performance of MSEs; to assess the effect of accounting on the performance of MSEs; to investigate the effect of auditing on the performance of MSEs; to establish whether tax accounting has an effect on the performance of MSEs; to explore the non-compliance services effect on performance of MSEs. This research was guided by agency Theory, Resource based Theory and Decision Theory as the theoretical framework. The study adopted a descriptive research design. Using Yamane's formula, a stratified sample of 74 Micro enterprises from 26 MSE's were arrived at. A pilot study was carried out to test the reliability and validity of the data collection instrument which was a semi structured questionnaire. The data collection tool was self-administered and distributed to the selected and representative sampled from population. A response rate of 72% was achieved. Primary data was analyzed with the aid of Statistical Package for Social Sciences (SPSS) software. Descriptive statistics, that is, frequencies, mean, and percentages were generated and discussed before testing the alternative hypothesis. Tables were used to present various aspects of the variables. A bivariate linear regression model was used to determine the nature and significance of the relationship between the five study independent variables and performance of MSE. The findings of the study indicated that bookkeeping, accounting, auditing and tax accounting individually had a significant effect on the performance of MSEs. This study recommend that MSE's should leverage the use of small accounting practices to improve financial performance. Collectively, Book keeping and non­ compliance had an effect on the performance of MSEs.