Abstract

Contemporary research is emphasizing the development of sound accounting systems in SMEs in order to improve financial management in these entities. This research investigated accounting record keeping practices for performance measurement employed by SMEs in Zimbabwe, using Bindura as a case. The survey research design was used. The target population comprised of 100 SMEs operating retail shops, manufacturing firms and suppliers of various services in Bindura. A structured questionnaire was used to collect primary data from the respondents which was analysed to generate frequencies and percentages. The study revealed that the majority of SMEs do not keep complete accounting records because of lack of accounting knowledge and as a result there is inefficient use of accounting information in financial performance measurement. The study recommended that national regulators must develop specific accounting guidelines for SMEs and develop accounting training programmes for entrepreneurs in small businesses. The study also recommended mandatory record keeping, to improve accounting practices of SMEs in Zimbabwe.

Key words: Small- and medium-sized entities (SMEs), record keeping, accounting practices, accounting concepts, profit measurement, international financial reporting standard for small- and medium-sized entities (IFRS for SMEs).

Abbreviation

GAAP, Generally accepted accounting practices; IASB, international accounting standard board; IAS, international accounting standard; IFRS, international financial reporting standard; SME, small- and medium-sized entity; ZIMRA, Zimbabwe revenue authority; VAT, value added tax.