Accounting Practice Applied by Small and Medium Scale Enterprises in Nepal [With Specific Refer to Kathmandu District]

Abstract

Accounting practice can be defined as management oriented accounting in relation to management function. The rapid changing of business environment lately is significantly changing the accounting practices in an organization. Accounting should move from administrative level to the strategic ones. The main focus of accounting has always been to improve the organization performance by providing relevant information for planning, controlling and decision making. The research used simple judgment procedure to draw the samples. And the samples are 20 small and medium industries operating under financial sector of Nepal. This research examined the accounting methods which are cost accounting, financial accounting and management accounting the major difficulties for applying the management accounting tools in the SMEs of financial sector of Nepal. The research also tries to assess the impact of accounting system on performance of sample organizations. The specific survey research has been followed with descriptive statistic was used. A structured questionnaire was used to collect primary data from the respondents which were analyzed by the simple percentage tool, correlation and t-test. The study indicated that the widely used tools in SMEs of financial sector of Nepal are annually budgeting. The study revealed that there is a significant impact of accounting systems on organization performance. It can be concluded that, in general, the accounting practices were still on traditional perspectives because of lack of exercise, lack of co-ordination to staff & department, nature & size of the business and government policy of companies. Based on the result, the study recommended that, to implement the effective accounting tools and techniques, a separate accounting department should be established within organization. The study also recommended that academicians who have better knowledge about the accounting practice tools and techniques should put an effort to develop environmental friendly tools and techniques into practice. It helps to make them informative throughout time to about aspect of accounting and its application.