THE ROLES OF ACCOUNTING IN SMALL SCALES INDUSTRIES

By

EZEANIEKWU NNEKA

Presented To

Department of Accountancy

TABLE OF CONTENTS

COVER PAGE I

TITLE PAGE II

APPROVAL PAGE III

PREFACE IV

FOREWARD V

DEDICATION VI

ACKNOWLEDGMENT VII

TABLE OF CONTENT IX

CHAPTER ONE

1.1 DEFINITION OF ACCOUNTING 1

1.2 BRIEF HISTORY OF ACCOUNTING

NIN NIGERIA 3

1.3 BASIC CONCEPTS OF A CCOUNTING 7

1.4 IMPORTANCE OF ACCOUNTING

INFORMATION 11

1.5 ROLS AND FUNCTION OF

ACCOUNTING IN AN ECONOMY 13

CHAPTER TWO

2.1 BRIEF DEFINITION OF INDUSTRY 15

2.2 WHAT IS LOCATION OF INDUSTRY 15

2.3 WHAT IS PROBLEMS NORMALLY-

ACCOMPANY LOCALIZATION OF

INDUSTRY 16

2.4 SOURCES OF FUND AVIALBLE

FOR SMALL SCALE INDUSTRIES 17

2.5 IMPORTANCE OF SMALL SCALE

INDUSTRY IN AN ECONOMY 18

2.6 ADVANTAGE AND DISADVANTAGES

OF LOCALIZATION OF INDUSTRY. 19

CHAPTER THREE

SUMMMARY OF FINDINGS 24

CONCLUSION 24

BIBLIOGRAPHY

CHAPTER ONE

DEFINITION OF ACCOUNTING

As the nature of this course, Accounting is a very interest and important course for which every body in the society wants to join because in a well developed country accountant there is a lot of misunderstanding.

Therefore, accounting are defined by many professional accountant according to American Accounting Association defined accounting as the process of identifying measuring and communicating economic information to permit informed judgment and decision by users of the information.

Accounting also has been defined variously as a service activity, a descriptive and analytical discipline and an information system. As a service activity, it provides interested parties with quantitative financial information that help them to take decisions about the employment, development and use of resources in business and non business entities in an economy. As a descriptive and analytical discipline, it deals with mass of events and transaction of business entity by providing measurement classification of data and summarizing.

Furthermore, accounting may be defined as art of recording, classifying and summarizing, analyzing, interpreting and reporting on the financial transaction and position of an organization to interest persons.

This definition of accounting is more proffered because whenever, two or more individuals come together to organized a union or organization it must involved the use of money. The accurate recording of financial dealing of the group, as well as the correct reporting of the financial results of the union's activities for a period to the members of that organization, society etc. Because of the above, accounting are seen as the duty of accountant. Therefore, an accountant kept all the necessary record of financial statement to every organization.

On of the major/ fundamental principle of this record by an accountant is to make sure that all the monetary value of an organization are well kept without any kobo being captured.

According to America Institute of certified public accountants, they say that accounting is the art recording classified and summarizing in a significant manner and in term of monetary transactions and events which are in part at least of a financial character, and interpreting the result there to.

1.2 BRIEF HISTORY OF ACCOUNTING IN NIGERIA

In olden times there has been no acceptable record as to when accounting developed. Many schools of thought have narrated the historical development of accounting from their various historical perspective and physiological backgrounds.

In Nigeria is a former British colony, which is among the influences of Britain on Nigeria, is modern commercial accounting. It will be incorrect to attribute the beginning of accounting in the country to the advent of the Europeans. As it was stated above there was flourishing commerce among the various units that make-up modern Nigeria, there are some means form of accounting before that time. The origin of accounting in Nigeria must be assumed to be akin to it's origin all over the world. It arose with the earliest form of commercial transaction known as trade by barter.

With time, because of modernalization and advert in the world and in transaction of the business, this method above proved unsatisfactory as the scale and sophistication of commercial engagement increased. With the monetization of the traditional economics through the introduction of various unit of exchange, cowries, beads, manilla, etc. his normal evolution of an accounting system. Whether through indigenous invention or through across the border importation via routine influences suffered a violent dislocation and upheaval, like every other thing as a result of the impact of colonialism.

As time are progressing, the British master establishes training all over Nigeria, the masters also introduced coinage currency which mostly introduced to the charted trading companies, these trading concerns grew in size and complexity, and in order to maintain the necessary political and social for trade and development, they began to excise governmental control.

With the advent of colonial rule in Africa, the European system of accounting was introduced in most Africa countries which Nigeria is one of them. Many Nigerians who were interested in studying related courses in accountancy were given scholarships both within and outside the country. Accounting courses were organized in Nigeria school like Yaba high Collage, Collage of Arts and Science Zaira, Ibadan etc. Nigerians who finished their course abroad met their counterpart at home and established the Institute of chartered Accountant of Nigeria (ICAN) by an act of parliament No 15 of 1965. by this act, the institute was empowered to establish training centers for the training of many professional accounting all over the country. But today we have many professional accounting bodies for which Nigerians and Nigeria are members.

(i) I.C.A - Institute of Charted Accountant of

wales and England

(ii) I.A.S.C - International Accounting standard

committee

(iii) I.F.A.C - International federation of Accountant

and most recently the Association of

Nigeria (ANAN)

On September 9, 1982, however, the institute established the Nigerian accounting standard Board (NBSB) to issue statements of accounting standard(SAS).

Finally, with the establishment of ICAN, many professional accountants have been trained and many of them practice in industries, private business, government establishment while some other established private firms where they practice as an independent auditors.

1.3 BASIC CONCEPTS OF ACCOUNTING

The concepts are those systems of accountancy that everyone is easily to understand and rules that all must keep which are useful in solving practical accounting problems. The following basic principles are known as the concepts of accounting mainly.

A. The concept of business entity

B. The prudence concept

C. The going - concern concern

D. The accrual concept

E. Historical cost concept

F. Dual aspects concept

G. Consistency concept

H. Realization concept

CONCEPT OF BUSINESS CONCEPT: The rule here is that all the affairs of a business, irrespective of whether it is a sole proprietorship, partnership, limited liability company must be kept separate from those of owner of the business. Therefore the business is seen as a person quite different from the owners. It does not include private affairs of the owners.

PRUDENCE CONCEPT: This concept holds that a person in business most likely to be successful if he is prudent in every thing he does. A cautioned accountant never take profit unit he actually made it and always accepts a loss at once even when there is a change he may recover it later.

GOING-CONCEPT CONCEPT

In this concept it says that an accountant is empowered to work out the final account of a business will continue for the conceivable future in other words it is going concern. If he has some reason to believe that it does not intend to continue. It is of fraudulent to prepare the account as if it were, if there is some prospect that the business or some part of it.

ACCRUALS CONCEPT: This is the type of concept in which income accruing to the owner of the business is not necessary the amount of cash actually received in a period of account. Any event, which increased the proprieties capital, involves the accrual of income.

HISTORICAL COST CONCEPT: This concept holds that the cost incurred in the acquisition of fixed assets, for services rendered or received, and as expenses should be the basis for their initial accounting recognition, creditors and owner interest should be equally recognized at their historical cost of acquisition and historical cost value should be retained throughout the accounting process.

DUAL ASPECT CONCEPT: this concept is rule behind the double entry principles which was in two aspects of accounting one represented by the assets of a business and the other by the claims against them.

CONSISTENCY: This states that any method of accounting adopted by any organization should be used consistency over a given period of time in order to avoid overstating the profit or capital of the firm there before any change will occur enough notice will be given.

REALISATION: Under this concept it stated that revenue is considered as earned on the day it is realized, and this is when goods are transferred to the customer in exchange for a valuable consideration.

IMPORTANCE OF ACCOUNTING INFORMATION: Before any organization will function effectively and efficiency in contempory business world it is necessary and important for such organization or firm to kept necessary accounting information which will enable the organization to carry out the objective function or aim. Accounting information are importance the following reasons.

(a) Inputs and their cost of acquisition: Accounting information kept helps an organization to know the quantity and quality of inputs required in order to achieve the objective of the masses and also the price, which accompany the products.

(b) Planning productions: Accounting information help the organization in plan for the welfare of the firm both in production, selling, administrative etc. departments, where to obtains raw materials and how to convey the available raw materials to the firm for maximum production.

(c) There is need for accounting information in order to ascertain the amount of profit or loss made in an organization of it's true financial statements.

(d) VALUE OF OUTPUT: With knowledge realized from accounting information. It help to determine the value of goods produced. This will enable the owner or organization to decide on the method of sale and fixing the selling price etc.

(e) Cost of various activities relating to production: Accounting information is also necessary to decide the type of labour to be acquired and the amount to be paid to labour as wages and salaries.

(f) It also helps in solving problem of transporting of in and out of gods and services, amount of rate and rent, insurance etc.

1.4 ROLES AND FUNCTION OF ACCOUNTING IN AN ECONOMY

The roles and functions of accounting in any given economy let say Nigeria for instance is over and above emphasis because accounting records kept enables on economy to plan how to utilize it's available resources. Because of its feasibility studies and report in nature it's enable an economy to know how to mobilize its resource more efficiency which includes.

a) Accounting helps an economy to operate at the optimum level. This is true because it ensure that resources are obtained from their source more economically, and effectively and ensure that none of the available resources are not waste therefore they are mobilized and put into optimal uses.

b) Accounting information helps an economy to prepare the national income and national budgets. Without an accountant a nation can not be able to ascertain the quantum of productive going on in the economy.

c) Accounting record enables potential investors to put their investment into an optimal utilization and this would be achieve by providing adequate feasibility report, thereby, increase the investment inflow into an economy.

d) Accounting also provides adequate reward and returns to the activities of an economy. These cannot only be seen by the stakeholders to have been produced which final leads to accountability and reliability.