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Entrepreneur Department
📄 Pages: 65 🧠 Words: 6331 📚 Chapters: 5 🗂️️ For: PROJECT
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Measuring the SME's profitability is a central task both in accounting practice and theory (Benjamine, 2002). The management of SMEs need the profitability information for their decision making both in the short and in the long run and therefore must take steps to ensure the profitability of the organization (Goldberg, 2009).
However, using one or another depreciation accounting method, an additional deduction of the income tax is possible, thus increasing the net profit available for the SME for the organization development. In depreciation accounting practices, the methods used includes linear depreciation, degressive depreciation and accelerated depreciation.The bigger the expense input with the depreciation, the bigger the net profit - situation found when a faster accounting depreciation policy is used (Wood, 2007). In other words, the effect of the depreciation accounting practices appears in choosing one of the depreciation methods used. In accountancy, depreciation practices refers to two aspects of the same concept: The decrease in value of assets (fair value depreciation) and the allocation of the cost of assets to periods in which the assets are used (depreciation with the matching principle).
1.5 Research hypotheses
HO: There is no significant relationship between the digit method of depreciation impact on the profitability of a small and medium scale enterprise.
HA: There is significant relationship between digit method of depreciation impact on the profitability of a small and medium scale enterprise.
Depreciation Accounting Practices and Profitability of selected Small and medium Enterprises development has been an area of intense research both in practice and academia. This empirical investigation of SMEs is therefore a significant contribution to existing literature. Furthermore, the study would provides evidence on the extent to which Rivers state Small and Medium Enterprise are accounting accommodating in readiness for gaining strategic competitive advantages in their businesses.
The study would also provide uniqueness of small and medium scale businesses call for careful consideration in the design of accounting systems. Small and medium scale enterprises are a vast majority of businesses found in variety of primary and intermediate production of the economy.
The outcome of this study will be useful for business managers and stakeholders in accounting sector on ways by which various depreciation accounting practices can influence the profitability of a small and medium scale business.This research will be a contribution to the body of literature in the area of the effect of personality trait on student's academic performance, thereby constituting the empirical literature for future research in the subject area.
1.7 Scope of the study
This study will cover some selected Small and medium scale enterprises in Port Harcourt. This study will also cover the depreciation accounting practices in the various selected business organizations with a view to determining their effects on the profitability of the firm.
1.8 Limitation of study
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.9 Definition of terms
Depreciation: a reduction in the value of an asset with the passage of time, due in particular to wear and tear.
Profitability: is the ability of a business to earn a profit. A profit is what is left of the revenue a business generates after it pays all expenses directly related to the generation of the revenue, such as producing a product, and other expenses related to the conduct of the business activities.
Tax: a compulsory contribution to state revenue, levied by the government on workers' income and business profits or added to the cost of some goods, services, and transactions
📄 Pages: 65 🧠 Words: 6331 📚 Chapters: 5 🗂️️ For: PROJECT
👁️🗨️️️ Views: 586
