| dc.description.abstract | Small and medium scale enterprises are gaining wide spread acceptance as viable drivers
of economic growth. A sound accounting and internal control system in any business
irrespective of its scale is crucial. Audits of small scale enterprises have proven to be
worrisome for professional accountants because of the inadequacy of the internal
controls. The study sought to establish whether a relationship exists between accounting
systems, the manner in which accounting records were maintained by SMEs and their
financial performance. The study adopted a descriptive research design on SMEs in
Nairobi Central Business District. The study sampled 391 SMEs in Nairobi Central
Business District. Systematic sampling technique was used to sample SMEs. Descriptive
statistics and regression analysis was used to analyse the findings. The study found that
revenue and expenditure accounts play a major role in ledger accounts. For ledger
accounts to be effective, revenue and expenditure accounts must be well prepared to limit
chances of negative financial performance of SMEs in Nairobi County. It found that an
improvement in keeping and preparing purchases and sales ledgers can result in improved
financial performance. It also found that all the SMEs in Nairobi CBD keep purchases
and sales ledger, cash book, revenue and expenditure accounts, statement of income and
balance sheet. It found that most SMEs neutrally agree that purchases ledger shows all
purchases returns of the business, sales ledger shows all returns to the business and sales ledger shows all the receivables of the business. Finally, the study found that a large number of SMEs prepare balance sheets as they convey substantial information about the financial strength and current performance of an enterprise. | en_US |
