Determinants Influencing The Adoption Of Accounting Practices By Small And Medium Enterprises In Nairobi, Kenya

Abstract

Already burgeoning literature on small and medium enterprises indicates the essential role they play in economic development in countries that are both developed and developing. Accounting plays a significant role as a determinant of success or failure of business enterprises especially SMEs. Accounting practices avail information to both the owners and managers of SMEs and thus they are indispensable to firms that seek a growth trajectory and improved performance goal. Firms have competing needs for their resources and professional accounting services have to equally compete for the scarce resources of the firm. Never the less, examined literature indicates that some influencers may have a direct role of determining whether a firm uses accounting services or not. The main objective of this research was to investigate the determinants influencing the adoption of accounting practices by various SMES operating in Nairobi, Kenya. The study used a descriptive research design. The targeted population included all SMEs operating in Nairobi County that are licensed. Simple random sampling was used to pick out the sample size of 85. Data collection in this study was done through use of a questionnare. The findings show knowledge competence, competition, legislation and firm size influenced the use of accounting services. SMEs need to hire qualified accountants to address the challenges that SMEs face such as stiff competition. This will enhance proper book keeping and in addition encourage the adherence to legal requirements of maintain proper books of accounts and this will also promote the growth of SMEs.