ABSTRACT

Accounting information is a part and parcel of today’s life which is necessary to understand the accurate financial situation of the organization and used as the basis of making strategic decisions. Accounting plays a critical role in the success or failure of contemporary business institutions.

Accounting information serves as a critical tool for recording, analyzing, monitoring and evaluating the financial condition of companies, preparation of documents necessary for tax purposes, providing information support to many other organizational functions,(Amidu et al., 2011). In the context of SMEs, accounting information is important as it can help the firms manage their short-term problems in critical areas like costing, expenditure and cash flow, by providing information to support monitoring and control.

The uniqueness of small and medium scale businesses call for careful consideration in the design of accounting information systems for their various financial transaction and also in the case of preparing their day to day accounting transactions, moreso small and medium scale enterprises are a vast majority of businesses found in variety of primary and intermediate production of any developing economy like Nigeria. These establishments have tremendous impact on the state and well being of the nation in employment generation, as sources of national outputs and revenues, providing feedstock for large corporations, though they may lack the sophistication to apply the detailed accounting processes, yet the value of accounting systems to these businesses is quite profound. 

Though, Accounting information System have been perceived as a means of providing financial information to enterprises, but these studies have also found out that despite their usage there has been considerable evidence that within SMEs, they are still having ineffective information management, poor system control, and most decision making is on ad hoc basis, however, the above reason as a result of this situation could be attributed to the initial objectives of Accounting Information Technology (IT) adoption.

It is against this backdrop that this study tends to determine and evaluate the impact of accounting system on the performances of small and medium scale enterprises, extent to which sound accounting Information System is carried out among SMEs businesses, as well as the limitations of small and medium enterprises to implementing full accounting information systems making use of the Small Scale medium operator in Sagamu Metropolis.

Chi-Square and correlation analysis shall be used in testing the hypothesis, at the end of the study recommendations were made.