Financial Accounting Practices and Business Growth: Evidence from Small and Medium Scale Enterprises in the Cape Coast Metropolis

Abstract

In the last two decades, significant emphasis was paid to the economic importance of SMEs for Ghana's development and prosperity. Numerous studies have focused on the sustainability and development of Ghana's small and medium-sized businesses. Record keeping and accounting procedures are one area that has been found to have an effect on the development of SMEs. While academics believe that accounting practices are poor among SMEs in Ghana, there is little data from the viewpoint of SMEs that use good accounting and how this impacts their company development. This research, using the record continuum theory, aimed to close this gap by examining the impact of financial accounting procedures on the development of small and medium-sized enterprises (SMEs) in Ghana's Cape Coast Metropolis. The research delivered 123 questionnaires to the owners, managers, and account officers of SMEs using an explanatory design and a purposive sample method. According to the findings of this research, financial accounting procedures have a favourable and substantial impact on the development of sales, profitability, and liquidity of SMEs. As a result of the study's findings, the National Board for Small Scale Industry advises that the National Board for Small Scale Industry develop training and rules to guarantee financial accounting procedures compliance.