THE RELEVANCE OF ACCOUNTING TO MICRO AND SMALL SCALE ENTREPRENEURS

Abstract

This paper seeks to assess the usefulness of accounting among micro and small scale entrepreneurs (MSSEs) in Ghana. The methodology applied was the mixed method under the multiple methods choices. Both qualitative and quantitative techniques were used. The findings were that formal education is not a pre-requisite requirement to the operations of a micro or small scale enterprise in Ghana. However, the study revealed that accounting information is used by MSSEs in their business decision making; thus confirming the assumption that accounting is a universal good and its applicability to every business organization. Findings on some major factors that influenced the usefulness of accounting amongst MSSEs revealed that: there were no state institutions or pressure groups in Ghana to influence or oblige private entrepreneurs (MSSEs) to prepare financial statements; the literacy of the entrepreneur although was found to be a necessary factor, it was not sufficient to explain the accountancy presence and the usage of its information by the MSSEs; trade globalization and its associated competitiveness influenced the relevance, reliability and for that matter usefulness of the accounting information to most MSSEs especially for target costing. Finally, the level of trust – i.e. social capital in the community, and its influence on the relevance of accounting, was surprisingly insignificant in the context of both rural and urban Ghana. No study of this kind has been conducted in the field of accounting usefulness to MSSEs in Ghana.