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FINANCIAL RECORD KEEPING SYSTEM AND PERFORMANCE OF SMALL & MEDIUM ENTERPRISES: A CASE STUDY OF NAKAWA DIVISION

CHAPTER ONE

INTRODUCTION

1.0 BACKGROUND TO THE STUDY

Record keeping is clearly essential to good administrative decision-making, consistency and fairness, impartiality, continuous learning and improvement, and effective risk management(Tacy,2004). Quality record keeping is critical and important for any kind of enterprises. Financial record keeping is critical and importantfor any kind of enterprise. It serves as a means of assessing business financial performance and setting standardsand making corrective measures in order to make up for past losses. Therefore, financial record keeping can besaid to be a tool used in performance management.

Financial record keeping is defined as procedure used by firms to make records of business transactions. TheAmerican Institute of Certified Public Accountants defines financial record keeping as the analysis, classification and recording of financial transactions in books of accounts to permit informed judgement and decision making by the users of the information (Saleem,2008).

Williams et al. (2008) financial record keeping is about the maintenance of a history of one’s activities, as financial dealings, byentering data in ledgers or journals, putting documents into files. The importance of financial record keeping cantherefore not be overemphasized both in our contemporary lives and particularly in our businesses. Fromproperly kept financial record a person can at any time ascertain: what property he possesses, what amount heowes and to whom, what profit he has made or what loss he has sustained for any given period and the mannerin which the profit and loss has risen, and the amount of his capital or deficiency. If no records are kept, it willbe difficult to find accurate net profit. Under such circumstances, tax authorities may overestimate the profitsand thus a trader will suffer for not having kept the business records. 

In absence of proper business records, thetrader will find it difficult to submit the true position to the court in case he becomes insolvent. Keeping of records help the trader to make future business plans and policies; also, it will be difficult to ascertain and fix the price of business to be sold or disposed-off if no records are kept. Finally, in spite of the best memory, it is beyond the capacity of a trader to remember all the business dealings with back references(Williams et al, 2008).

Small and medium enterprises (SMEs) comprise the largest proportion of businesses in most economies and frequently offer the greatest potential for job creation(Asquith et al,1994). The Ugandan government has placed a lot of emphasis on the development of SMEs as a means of encouraging self – employment, poverty reduction and accelerating economic growth. SMEs contribute to the employment opportunities in Uganda and over 40% of the GDP. Despite their significance, recent studies show that 60% of the SMEs fail within the first few months of operation (Uganda Bureau of Statistics, 2007). It is hard for SMEs to access finances from the financial institutions since they lack financial records as a requirement (Williams et al.,2008). 

Performance of a business, that is how well or poorly a business is doing viz-a viz owner- manager set objectives is crucial to business success. Once a business is not performing well, certain danger signals such as poor profit growth will manifest. Murray(1994) argues that “many small and medium enterprises owners either do not understand the significance of these warnings or tend to optimistically believe that things will get better on their own”. 

Poor performance of SMEs results into high failure rates: 75% of them fail within the first two years (Flusche et al, 2001) and 95% fail within the first five years (Gerber, 2003). Studies by Elkan (2008), Liedholm and Mead (2003) in Southern and Eastern Africa show that most small businesses stagnate at start-up size while Tulip and Bitekerezo (2003) further note that most small businesses in Uganda fail in the short run: one out of every two fails within the first two years of operation. 

While the performance levels of small businesses have traditionally been attributed to general managerial factors, such as manufacturing, marketing and operation, accounting systems may have a strong impact on the survival and growth of SMEs. The Financial Accounting Standards board (FASB, 2009) bases measurement of quality financial reporting on relevancy and reliability. However, financial reporting is not commonly practised in SMEs. Consequently, in practice, relevancy and reliability measurement of financial information in SMEs is based on financial record keeping(type of, adequacy and update of financial records). SMEs are less capital intensive in Uganda likewise in some parts of Africa which is provided by the informal sector of the economy.

1.2 STATEMENT OF PROBLEM

The causes of businessfailure includes management incompetence, lack of experience , lack of capital, over investment in fixed assets,poor customer credit practices, unplanned expansion and improper attitudes such as laziness, extensive vacationand unethical behavior. Some of the researchers did not link business failure to lack of proper record keeping.However, in recent times, increased attention has been focused on the effect of inadequate financial recordkeeping as a source of business failure. Thus, the study seeks to examine the effect of financial record keeping systems on the performance of small and scale enterprises.

1.3 PURPOSE OF THE STUDY

The study seeks to examine the effect of financial record keeping systems on the performance of small and scale enterprises. A case study of Nakawa Division, Kampala district.

1.4 SPECIFIC OBJECTIVES

Specifically, this study seeks to achieve the following objectives: 

1. To find out the kinds of financial records kept by small and medium enterprises’operators. 
2. To examine the benefits of proper records keeping in small and medium enterprises.
3. To determine the factors that account for the failure of small and medium enterprises in keeping proper books of accounts.
4. To assess how financial record keeping systems affect the performance of small and medium enterprises.

1.5 RESEARCH QUESTIONS

1. What are thekinds of financial records kept by small and medium enterprises’ operators?
2. What are the benefits of proper records keeping in small and medium enterprises?
3. What factors account for the failure of small and medium enterprises in keeping proper books of accounts?
4. How do financial record keeping systems affect the performance of small and medium enterprises?

1.6 SCOPE OF THE STUDY

The study will be carried out in Nakawa division, Kampala district. The main purpose of the study will be to examine the effect of financial record keeping systems on the performance of small and scale enterprises with specific emphasis on finding out the kinds of financial records kept by SMEs, it’s benefits, factors that account for the failure of small and medium enterprises in keeping proper books of accounts and how financial record keeping systems affect the performance of small and medium enterprises. This will take a period of three of month from March to May, 2017.

1.7 JUSTIFICATIONOF THE STUDY

The SMEs play a great role in Uganda economy. Despite their significance, the past statistics has shown that majority of the SMEs do not last for long after their establishment (Bowen, 2009). One major factor that has been blamed for the failure of the SMEs is poor or lack of knowledge in the business management by the entrepreneurs (Germain, 2010). Very few researches have been conducted in this area (Nakawa division). A study to investigate the extent to which the SMEs owners or managers keep records of their business operations will therefore be justified. In essence it is cost effective for this study to be conducted. 

1.8 SIGNIFICANCE OF THE STUDY

It the findings of this study will provide a more comprehensive picture of the current status of SMEs in terms of purpose of recordkeeping. 

A more comprehensive picture would, in turn, lead to a better understanding of this phenomenon and thereby the development of more effective strategies to aid effective operation of the SMEs. 

To the researcher, the study findings will contribute an award of a bachelor degree of Kyambogo University. 

To the policy makers, the study findings will bring forward remedies that can be applied to improve on their financial record keeping.

The findings will further lead to an increased knowledge base to future academicians and researchers.

CHAPTER TWO

 LITERATURE REVIEW

2.0     Introduction.

This chapter will consist of related literature. It will base on the research objectives; to find out the kinds of financial records kept by small and medium enterprises ‘operators; to examine the benefits of proper records keeping in small and medium enterprises; to determine the factors that account for the failure of small and medium enterprises in keeping proper books of accounts and to assess how financial record keeping systems affect the performance of small and medium enterprises.

2.1 Basic records to be kept by SMEs

Financial record keeping is influenced by so many factors including the type or nature of business, type of information required, and volume of activities and others. Many business owners choose to use software to keep track of various aspects of their business, and resources are provided here to help you institute computer automation. The key to taking full advantage of accounting software is to save time and give freedom to concentrate on running your business

Revenue and Expense; a business will use a revenue and expense journal or a ledger to keep track of records of how much money is going out, where it is going, what is coming in. A revenue and expense journal is used by most small businesses and is single –entry accounting, recording receipts and expenditures only. Double entry accounting involves a ledger and necessitates that each activity be recorded as a debit and credit on your books. In the past it was thought all businesses need to use the more cumbersome method of double entry, but the single entry system is now used by many business owners. Single – entry accounting can be kept on paper or computer. A ledger is used to record every transaction twice based on the idea that each transaction has two halves that affect your business. For example, if you sell an item, your book will reflect decrease in inventory (debit) and inflow of payment (credit).

Cash Expenditures; cash spent in an organization needs to be accounted for if you want to record all business expenses in a given year. There are at least two ways to do this: write yourself reimbursable cheque or keep a petty cash record. If you choose to pay yourself back with a cheque, simply keep track of all cash receipts and total them weekly , bi-weekly or monthly , depending on your volume of expenses. Keep a log of each category of expenses, for tax purposes; write yourself a cheque for the total. Write cash reimbursable in your cheque register to differentiate this from taxable income. Alternatively, you can keep a petty cash record by writing a cheque to petty cash and keeping a log of each expense paid out of petty cash.

Inventory Records; keeping your inventory records will enable business owners to prevent pilferage, keep inventory holdings to a minimum, and track buying trends among other things . The crucial inventory information needs to capture date purchased, stock number of items purchased, purchased price, date sold and sale price.

Accounts Receivables; products or services are paid for at time of delivery, an account receivable tracking system is needed. However, if services are provided or products for which people pay at a later date, the accounts receivable record keeps track of what is owed to you. Business owners can monitor accounts receivable by holding on to a copy of all invoices sent out or by keeping an account receivable record. Either of the ways, the information is needed to capture invoice date, invoice number, invoice amount, terms, date paid, amount paid, and the name of the entity being billed.

Accounts payable are debts owed by an organization for goods and services . Keeping track of what is owed and when it is due will enable the organization to establish good credit and hold on to your money as long as possible. Business owners with few accounts payable items use accordion file folders labeled with dates to keep track. Larger companies use account payable paper records organized by creditor. Regardless of the system you choose, you should retain the following information about accounts payable: invoice date, invoice amount, invoice number, terms, date paid, amount paid, balance (if applicable), and clients’ names and address.

2.2 Benefits of record keeping in SMEs

Since financial record keeping involves keeping accurate records of companies’ spending and revenues. Some small business owners decide to do their own financial record to save on costs while others prefer to hire a trained accountant. Some of the benefits are as follows:

Financial Comparison; a comprehensive record keeping system allows a business owner to analyze spending and revenue at any particular point in time. The data can be grouped by the week, month, quarter or year to be analyzed and compared to past years. This is one way that business owner can discover ways to cut back on company’s spending and improve profitability. The books of accounts maintained correctly and in a proper manner helps a lot of making comparison of the current year profit with that of the previous year and tell significant factors as to why profit is more or less in comparison to that of the previous year.

Budget Monitoring; Companies require an accurate report of current spending and revenue to help compare actual results with projection in the annual budget. A record keeping system facilitates up- to- date company financial information that can be cross- checked with the budget to make sure that the company is not over spending. Financial record keeping also identifies instances of under –spending so the company may find new uses for the extra money to help productivity.

Tax Deduction; a financial record keeping system makes it easier to report revenue for tax filings at the end of the year, but a comprehensive spending profile can also help you find tax deduction that will lower your tax burden. If you do your own record keeping , you need to stay updated on tax laws and changes in the tax code that may allow you take deduction to help offset the costs of doing business. Without a record keeping system, you would have no documentation to back up your deduction. Properly prepared accounts help a business man in dealing with various tax regulating authorities like sales tax, central excise, income tax etc. These require filing of periodic returns and submitting proof of activities. The records maintained under the accounting system help in preparing such returns.

Payroll; Record keeping services include checking the accuracy of each payroll period to make sure that each employee receives the proper amount , an especially important function in organizations that pay bonuses, sales commission and supplemental payment based on a percentage of revenue. Confirming payroll numbers keeps employees satisfied with their pay and prevents the company from over or underpaying payroll taxes as well.

Information Regarding Performance and Position; The final account reveals how much profit has been gained or loss suffered during the period. The balance sheet or position statement also depicts the exact financial position of a business by showing assets and liabilities on a particular date.

Legal Obligation; One of the advantages to record keeping is that you are meeting a legal obligation to maintain financial reports for your company. You must track and document revenue and expenditure in order to pay appropriate taxes each year. Not maintaining company books can result in government penalties if you are audited and asked to produce evidence of your company’s business transactions. Properly prepared books of accounts can be produced as a proof of matters. This is admitted by the courts as evidence in legal matters.

Helpful in raising loans; Every business needs additional funds for its growth. This requirement is met by commercial banks and other financial institutions in form of loans. These institutions before granting loans , screen various statements prepared under accounting information such as final accounts, fund flow statements , etc.

Accountability and Transparency; Another advantage of keeping financial records is accountability and transparency. It creates accountability with customers, since you are able to look at previous transactions to verify prices and payments made. It also creates accountability among business partners, since authorized partners may access the company’s books to review revenues and expenditures, or to scan for signals that money is being used or reported inappropriately. It creates greater transparency; companies can open their books to potential investors interested in documentation of the business financial health.

Assistance to various parties; Accounting assists and guides the management or owners in planning business activities taking certain decision where choice of alternatives is involved and controlling the business operation to ensure the achievement of goals.

Minimization of Errors and Frauds; Proper accounting system not only checks errors and frauds, but also minimizes them. As in double entry system of book keeping, business transactions are recorded at many places to minimize frauds.

2.3 Factors that account for the failure of SMEs in keeping proper books of accounts

The factors that account for improper records keeping has been identified as illiteracy, lack of qualified personnel and hire cost to hire a consultant (Maseko & Manyani, 2011).  They disclosed that the most predominant challenge is costs constraints, followed by inadequate accounting skills of manager and owners of SMEs. These studies believed that most business owners and employees have no vocational and technical training and were therefore inexperienced as far as record keeping was concerned and that considering the size of the SMEs, the owners deemed it waste of resources to employ qualified accountants. SMEs are reluctant to maintain proper books of accounts as they think there is no need to keep accounting records and believe that, it would even expose their financial position for tax purposes (Amoako, 2013). 

Musah & Ibrahim (2014) were also of the view that owners of these businesses feel reluctant to record their daily activities (revenues and expenditures) because of the low worth, returns and performance of their businesses. They argued that the owners, therefore, tend to rely on their memory and do not necessarily see the need to maintain books of accounts. 

Poor or lack of records keeping by small scale businesses in the country would not only limit their ability to accurately and reliably measure their financial performance and position, but also deny the government the right tax revenue from them. Other users such as customers, suppliers, financial institutions, existing and potential investors would find it difficult to make financial decisions due to improper or non-availability of financial records (Musah & Ibrahim, 2014).

SMEs Owners have many tasks. One of the most important and vital to the success of their business is keeping good records. According to Howard (2009) many small businesses fail to keep adequate records. This leads to major problems and quite possibly the closing of the business. Evidence shows that keeping good records helps increase the chances of business survival. In essence, the SMEs owners or manager should be personally involved in record keeping (Sian, 2006). Good record keeping will make them more aware of what is going on in their businesses and it will save them money. 

The system used to record information may vary from business to business, but the principles are the same (Howard, 2009). According to Walistedt (2006) one must record all monies coming and going out of the business. The first action to take is to identify financial transactions. Look at how the business operates and identify how financial transactions are processed. The question the owner or manager need to ask is how he invoice customers and how the inventory is purchased. This is followed by making a list of these transactions and the paperwork that supports them. One has to put a system in place for records and set up and operate a system that includes the following: Sales that is used to record invoices relating to sales, Purchases that is used to record invoices relating to purchases, Cash transactions that is used to record cash payments and receipts, Returns that is used to record credits given to customers and for goods returned and the General that is used to record other transactions. 

Another key action of the manager or owner of the SMES is to identify paid and unpaid items. One has to set up two files. One used to store the paid items and the other to store unpaid items. Decision should also be made when to write up entries where one has to set up a procedure for recording entries. Information should be recorded consistently and at set times. Daily is ideal, but one may be able to do it weekly or monthly, depending on the amount of transactions. One has to make sure that the records are being followed and set up and operate systems for checking and monitoring the recording of financial information. It is essential to make sure that an invoice has been issued for every transaction; that a receipt is requested and obtained for every purchase (Zhou, 2010). It is also imperative to reconcile frequently once a month, reconcile the petty cash against receipts and even the bank statements. This will enables to check that all payments have reached the owner of the enterprise account.

In many countries, the laws mostly require that the Enterprises prepare financial statements and, often, have them audited (EC, 2008). This requires that the owners of the enterprises have some knowledge of bookkeeping and accounting. Ismail and King (2007) conclude that the development of a sound accounting information in SMEs depends on the owners’ level of accounting knowledge. Research has shown that majority of the SMEs owners do not have the required accounting knowledge and therefore few able owners use professional firms to account for their business (Keasy and Short, 2000). However, Jayabalan and Dorasamy (2009) argue that the high cost of hiring professional accountants leaves the SMEs owner or managers with no option but to relegate accounting information management. Wichman (2003) concludes that accounting and marketing pose major challenges to management of SMEs and recommends that managers or owners in SMEs must learn about record keeping and accounting.

According to research, there are some basic financial records SMEs managers or owners need to keep for the success of a business. These basic records will normally include the sales day book (sales journal), purchases day book (purchases journal), cash receipt book, cheque payments book, petty cash book, general journal, nominal ledger, debtors’ ledger and creditors’ ledger. These according to McMahon, (2009) must be kept and maintained in a sound accounting arrangement. In essence, one has to ensure proper record of the following financial records: (i) a record of all business sales, with copies of any invoices one has issued, (ii) a record of all one’s business purchases and expenses, (iii) invoices for all business purchases and expenses, (iv) details of any amounts one personally pay into or take from the business and (v) copies of business bank statements Entrepreneur or an accountant will use these records to create a profit and loss account which shows the sales income one received, and the expenses one paid, and what profit/ loss one actually made.

Furthermore, since businesses are different, there are many specific types of detailed records that may need to be kept. Some examples of records one should keep include: cash book petty cash book, order notes and invoices, copy sales invoices, details of any other business income received, details of any private money brought into the business, till rolls or other form of electronic record of sales, details of any other income, any cash taken out of the till to pay small business expenses, bills and invoices for purchases and expenses, a record of stock on hand at the end of the year and all bank and building society statements, pass books, cheque stubs and paying-in slips which include details of business transactions. 

Perhaps cash flow is one of the major records in any enterprise. Germain (2010) asserts that small businesses must consider maintaining a positive cash flow as a vital element. A pertinent question one might ask at this point is; to what extent do the owners and managers of SMEs keep good records of their business transactions? It would be helpful to curried out a study in endeavor to answer this question.

2.4 Summary of the existing gap in the literature 

Perhaps an ideal way to conclude the literature reviewed in this chapter is to in summary form highlight the major assertions and research findings and then comment on gap that this study endeavours to bridge. To begin with, researches on the contribution of SSEs to the Uganda economy reveal that SSEs play a vital role to creation of jobs and reduction of poverty in the country. The findings of the researches show that the Government of Uganda recognises this role and has made effort in terms of policies and financial support to aid the sector. It has also been proven that most of the SSEs in the country, despite the government support through favourable policies and bank support through removing barrier that are deterrent to access credit, these enterprises fail within few months of their establishment. Scholars and researchers also asserted that if business transaction records are well kept then the SSEs can succeed.

The research findings and the assertions by scholars presented in this chapter could be said to be very supportive to the growth of SSEs sector. However, unless research were conducted to specifically find out why even after the banks and government intervention majority of SSEs fail, then one cannot correctly argue out that much help to support this sector has been done. One kind of this research which was actually the major concern of this study was that of recordkeeping. A conspicuous gap this study endeavoured to bridge was that of the extent to which SSEs entrepreneurs kept accurate records of their business transactions.

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter presents the research methodology which include; Research design, study population, study area, instruments of data collection, data processing, Study  instruments, sources of data and data  analysis.

3.1 Research design

Thornhill et. al (2003) defined a research design as a general plan on how the researcher plans to answer the research question. Specifically, the case study will be used. A case study is an empirical enquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident and it relies on multiples sources of evidence (Yin, 1994). Case study research investigates pre-defined phenomena but does not involve explicit control or manipulation of variables: the focus is on in-depth understanding of a phenomenon and its context (Miles &Huberman, 1994). Case studies typically combine data collection techniques such as interviews, observations, questionnaires, and document and text analysis. Eisenhardt (1989) posits that Case study strategy focuses on understanding the dynamics present within a single settings. A case study research design, combined with both quantitative and qualitative methods will be used for this study. According to Baron (2011), qualitative research design helps to capture qualitative data, based on qualitative aspects that may not be quantified. It aids in discovering the motives and desires or what people think and how they feel about a given subject or situation. This method involves an unstructured approach to inquiry and allows flexibility in all aspects of the research process. It is more appropriate to explore the nature of a problem, issue or phenomenon without quantifying it. While quantitative research is the systematic empirical investigation of observable phenomena via statistical, mathematical or computational techniques (Mugenda & Mugenda, 2003). According to Silverrman (2001), quantification gives greater confidence in the accuracy of conclusions derived from qualitative data; and it gives the reader a chance to think through the data on their own to cap on the researcher’s findings. The research will use this method because it produces information only on the particular cases studied.

3.2 Study Area

The study will be carried out in Nakawa division, Kampala district. The selection of the study area is because of the easy accessibility.

3.3 Study population

Study population is a complete set of individuals, cases or objects with some common observable characteristics. The population will include employees holding familiar and unfamiliar titles but are deemed to be suitable stakeholders for generating relevant data to the problem which will be under investigation

3.4 Sample size

The sample size will consist of 50 respondents from the study area. It is determine based on the Krejcie and Morgan’s sample size calculation which same as using the Krejcie and Morgan’s sample size determination table. The sample size determination is derivative from the sample size calculation which expressed as below equation (Krejcie and Morgan, 1970). The Krejcie and Morgan’s sample size calculation was based on p = 0.05 where the probability of committing type I error is less than 5 % orp <0.05.

S=X2NP (1-P)d2 (N-1) +X2P (1—P)

Where,

s = required sample size.

X2=the table value of chi-square for 1 degree of freedom at the desired confidence level (0.05 = 3.841).

N = the population size.

P = the population proportion (assumed to be 0.50 since this would provide the maximum sample size.

d = the degree of accuracy expressed as proportion (0.05).

The study will use a sample size selected 52 respondents because it will be enough for the study to obtain reliable information. In addition, it will help the researcher to finish her study in time.

3.5 Sampling method

According to Baron (2011), this is a definite plan determined before data collection for obtaining a sample from a given population. It involves three decisions: who to be sampled, how many people to sample, and how to obtain the sample. 

Simple stratified random sampling will be then used to select samples from the population strata. It’s a method in which the population is divided into a number of divisions and a sample is drawn from division and such sample makes us the final sample. This technique will be employed since it eases the making of proportionate samples, and therefore meaningful, comparisons between homogeneous sub-groups (Zikmund, 2003). 

The study will also employ purposive sampling technique. Silverrman (2001), purposive sampling involves deliberate selection of particular units of the population for constituting a representative sample. It involves convenience and judgemental sampling. Under judgemental sampling, the researcher will choose the sample based on who he thinks would be appropriate for the study while convenience sampling will rise where the population elements are selected for inclusion in the sample based on the ease of access. The researcher will use purposive sampling because it saves time, money and effort. It is flexible and meets multiple needs and interests. It enables researchers to select a sample based on the purpose of the study and knowledge of a population.

3.6 Data collection methods and instruments

3.6.1 Questionnaire method

The researcher will use the questioning method whereby he will draft to respondents structured questions. This method will be used because some respondents may have no time to sit down and answer during interviews.

A questionnaire will be used and this will be in form of close ended in nature and this will allow the study respondents to fill the questionnaire in the study field. The questionnaire method of data collection will be used because of being cheap and that the method collects responses with minimum errors and high level of confidentiality.

3.6.2 Interview method

An interview is a conversation where questions are asked and answers are given. Interview refers to a one-on-one conversation with one person acting in the role of the interviewer and the other in the role of the interviewee.

An interview guide will be drafted with a set of questions that the researcher asked during an interview and this will be structured (close ended) in nature. Interview guide will be used by the study since the methods helps in the collection of more data as it allows the interaction of both the researcher and the respondents. 

3.7 Data collection procedure

The study will observe all procedures followed in research. Using the letter of introduction obtained from the Research Coordinator, School of management and Entrepreneurship, the researcher will be introduced to every respondent reached at, fully explaining the purpose of research. After getting their consent, he will set a program with the respondents on when the questionnaires will be administered and date for the interview sessions will be set. The researcher also will build the confidence of the respondents by assuring them that their views will be confidential and will be used only for academic purposes.

3.8 Validity and reliability of research instruments

There are no scientific principles which would guarantee a valid and reliable research instrument, but there are ways in which this can be pursued. First, the items in the research instruments should be based on prior research whenever possible. Due to this, in this study most of the questions will be to be based on prior research. Secondly, the questionnaire should be pre-tested (Malhotra & Birks 2007).

3.8.1 Validity

Validity can be defined as the degree to which a test measures what it is supposed to measure. There are three basic approaches to the validity of tests and measures as shown by Mason and Bramble (1989). Law &Kelton (1991) suggests that if a questionnaire model is “valid”, then the decision made with the questionnaire model should be similar to those that would be made by physically experiencing with the system. In order to ensure validity the questionnaire will be made clear and understandable, the questionnaire will be first discussed by the researcher with the supervisor; this will include careful choice of words, order and structure of questions plus the research instruments will be subjected to a content validity test (CVI). After receiving the questionnaires, manual editing will be done, followed by coding. Frequency count of different provisions will be done and this will give the number of occurrences and percentages out of total occurrences for different responses. And lastly simple conclusions will be drawn from the given percentages and numbers. 

3.8.2 Reliability

According to Mugenda et al. (2003), reliability is the degree to which a measure is consistent in producing the same reading or results when measuring the same thing at different times. Reliability is influenced by random error, that is, as random error increases, reliability decreases. The random error is the deviation from the true measurement due to the factors that have not effectively been addressed by the researcher. Mugenda study indicated that the questionnaire has to be well structured to achieve the purpose of the research thereby meeting the test of reliability. The reliability of the research instruments will be tested through a pre-test. The results will be subjected to the Cronbach’s Alpha reliability test to measure the internal consistency of responses. 

3.9 Data analysis

3.9.1 Qualitative Data 

Data processing will involve editing raw data to detect errors and omissions, classifying data according to common features, and tabulation to summarize and organize it. Data analysis will involve the qualitative approach of identifying the major themes arising respondents’ answers; assigning of codes to the themes: classification of the themes under the main theme; and integrating the responses into the report in a more descriptive and analytical manner.

3.9.2 Quantitative Data

Manual editing of questionnaires will be done to eliminate errors. After coding, tabulation will be done to clearly present various responses and the interpretation. Frequencies and percentages will be used to portray statistics used to analyze and interpret the findings of the study. Data analysis will be done using; correlation analysis to establish the relationships that exist between the variables. For ease of analysis, procedures within Statistical Package for Social Sciences (SPSS) will be used.

3.10 Data Presentation

Presentation of data will involve use of tables, pie-charts and graphs that will be generated from the questions relevant to the study variables. Interpretation and discussion of the results will be done as the researcher will explain the strength of the study variables basing on the frequencies and percentages, charts and graphs. 

3.10 Limitations of the Study

The study will be faced with a problem of not finding all respondents in the study area especially the employees who go to field as a group. The researcher however will arrange with them to fix for her an appropriate time in order to collect reliable and valid information from them for the study.

The study also will be expensive in terms of stationary. However the researcher will mobilize funds from her friends and family members for the study to be completed successfully in time with the help of her supervisor.

The researcher further will face a problem of some respondents not providing information for the study as information relating to the study variables, however to this, researcher will explain to them that the information will be only for the academic purpose while making them to understand the study variables. 

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS

4.0 Introduction

The study looked at the logistic management and supply chain performance. The findings from the study were presented and analyzed orderly based on the formulated study objectives. This was made possible with help of computer packages MS word, SPSS and Excel where by tables, graphs and pie-charts were generated.

The chapter begins by presenting the biographic characteristics of respondents in terms of gender; age, education levels, department, position and period of work. The study there after discusses findings as per the formulated objectives of the study.

4.1 Background information of the respondents

Under the gender distribution of respondents, the study was delighted with both male and female respondents as shown in the table below;

Figure 4.1: Gender of Respondents

Source: Primary Data

According to figure 4.1 above, 51.67% majority of respondents were male while 48.33% were women. This implies that the organization is gender sensitive since all categories of people were employed by the organization.

Table 4.1: Age bracket of Respondents

Source: Primary Data

From the table above, (46.2%) were in the age bracket of 31-40 of the respondents who were 41 and above, (17.3%) were in the age bracket of 18-30years. From the study majority of the respondents were in the age group between 31-40 years. This can be explained to the fact that it’s mainly the adults in this bracket that are married. 

Figure 4.2: Highest Level of education

Source: Primary Data

From figure 4.2 above, majority of respondents constituting 46.67% were diploma holders, 28.33% of them acquired 1st degree and 25% of the respondents had acquired secondary level. This justifies that the organization recruits, maintains and retains high qualified human resource to fill the positions of the organization who are capable of sustaining logistic management which implies that the selected sample had the capacity to avail the researcher with reliable and appropriate information on the topic under study.

Figure 4.3: Period of Work

Source: Primary Data

According to the figure 4.3 above, majority of the respondents (50%) had been in the organization for less than 2years while 40% of them had been in the organization from 2-5years and 10% of the respondents have stayed in the organization for 6-10years. This shows that the working experience for the categories of workers was enough to get conclusive results, since its assumed that by virtue of their positions, they know about the variables under study.

QUESTIONNAIRES FOR MANAGEMENT AND STAFF

Dear respondent, 

My name is WANYANA CHRISTINE and as partial requirement of the award of Bachelor degree of Administrative and Secretarial Science. I am carrying out a study on “Financial record keeping system and performance of small & medium enterprises: a case study of Nakawa Division”.  You have been selected to provide vital information that will facilitate the study. Your response will be treated with utmost confidentiality. Thank you very much for your valuable time. 

Section A: Background information about the respondent 

Section B: kinds of financial records kept by small and medium enterprises’ operators

5. In this section, tick the best option by using strongly Agree (SA), agree (A), Not Sure (NS), Disagree (D), Strongly Disagree (SD). 

Section B: Benefits of proper records keeping in small and medium enterprises.

6. In this section, tick the best option by using strongly Agree (SA), agree (A), Not Sure (NS), Disagree (D), Strongly Disagree (SD).

Section D: Factors that account for the failure of small and medium enterprises in keeping proper books of accounts.

7.. In this section, tick the best option by using strongly Agree (SA), agree (A), Not Sure (NS), Disagree (D), Strongly Disagree (SD).

Section E: Financial record keeping systems effect on performance of small and medium enterprises

8. In this section, tick the best option by using strongly Agree (SA), agree (A), Not Sure (NS), Disagree (D), Strongly Disagree (SD). 

Thank you for your time