UNIVER SITY OF GONDAR

COLLEGE OF BUSINESS & ECONOMICS

DEPARTMENT OF ACCOUNTING & FINANCE

A SENIOR EASSY SUBMITTED TO DEPARTMENT OF ACCOUNTING & FINANCE

FOR THE REQUIRMENT OF IN PARTIAL FULFILLMENT OF BA DGREE IN
ACCOUNTING & FINANCE RESEARCH PROPOSAL THE APPLICATION OF BASIC
ACCOUNTING SYSTEM ON SMALL ENTEPRISES IN CASE OF GONDAR TOWN

Prepared by ID NO

1, Amanuel Dessie……………05710/10

2, Abraham Guadie ……………04803/11

3, Alemwork Kassa……………05757/10

4, Azanaw Tekeba……………04954/09

5, Belete Muche………………05845/10

Advisor instructor, ALENE.

March, 2020

Gondar, Ethiopia
ABSTRACT
This study will focus on the application of basic accounting system on small enterprise in case of
Gondar town. The primary aim of this study will be obtain information concerning the
application of basic accounting system in small enterprises and to deal with their accounting
cycle, internal control system and inventory system of small enterprises. To do so the data will
collect through primary and secondary data. The primary data will collect by using questioners,
structural interview, and observation. The secondary data will collect by using documents which
are available for the study including financial statements of the small enterprises.

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Table of Contents
ABSTRACT.....................................................................................................................................................i
Chapter one.................................................................................................................................................1
Introduction.................................................................................................................................................1
1.1 Background of the study....................................................................................................................1
1.2 Statement of the problem.................................................................................................................2
1.3 Objectives of the study....................................................................................................................2
1.3.1 General objective of the study....................................................................................................2
1.3.2 Specific objective of this Study...................................................................................................3
1.4 Significance of the study..................................................................................................................3
1.5 Scope of the study...........................................................................................................................3
1.6 Organization of the paper..................................................................................................................3
Chapter two.................................................................................................................................................5
Literature review.........................................................................................................................................5
2. Theoretical review...............................................................................................................................5
2.1 Accounting Cycle................................................................................................................................6
2.2 Inventories Valuation.......................................................................................................................7
2.2.1 Inventory system......................................................................................................................7
2.2.2 Inventory valuation methods....................................................................................................8
2.3 Internal control system....................................................................................................................8
2.3.1 Principles of internal control.....................................................................................................8
2.3.2 Internal control over cash...........................................................................................................9
2.3.3 Voucher system........................................................................................................................11
2.4 empirical Review............................................................................................................................12
2.5 Research gap...................................................................................................................................13
Chapter 3...................................................................................................................................................14
Research Methodology..............................................................................................................................14
3.1 Research design...............................................................................................................................14
3.2 Type and Source of data:.................................................................................................................14
3.3 Target Population............................................................................................................................14

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 3.4 Method of sampling and sample size..............................................................................................14
3.4 Method of data Analysis:.................................................................................................................15
3.5 WORK PLAN.....................................................................................................................................15
3.6 COST BUDGET PLAN.........................................................................................................................16
Reference;.................................................................................................................................................17

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 Chapter one

Introduction

1.1 Background of the study

Accounting is the process of identifying, measuring and communicating economic information to
permit informed judgment and decisions by the user of the information. Accounting information
is used by every profit seeking business organization that has economic resources and non-profit
organizations. The accounting system used by a profit seeking business may be viewed as an
information system designed to provide relevant financial information on the resources of a
business and the effects of the use of those resources. (Fess warren, 1984)

This study will focus on the different elements of major accounting system those are Accounting
cycle, internal control and inventory valuation.

Accounting cycle is a complete sequence of accounting procedure that is repeat in the same order
during each accounting period. It includes: - Journal transaction, posting ledger account, prepare
worksheet, prepare financial statement, adjusting and closing entries and prepare post-closing
trial balance. (Walter B. Meigs 1989)

Financial statements are the means of conveying to management and to interested outsiders
concise picture of the profitability and financial position of the business. The two widely used
financial statements are balance sheet and income statement. (Hermanson, 1989)

Management needs assurance that the accounting information it receives is accurate and reliable.
This assurance comes from the company’s system of internal control.

This study would focus on how can control cash, purchase, storing and selling likely to be
directed and used impurely by employees.

Transaction and events exists in any business type and they should be handling as effective as
possible. This study would focus on small business enterprises with a paid up capital of up to birr
500,000 excluding high technological consultancy services and other higher technological
establishments, which is under cooperative societies.

This employed in:

 Construction

 Industry
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  different kinds of trade

 Municipal activities

Inventories are asset items held for sale in the ordinary course of business or goods that will be
used or consumed in the production of goods to be sold. The description and measurement of
inventory require careful attention because the investment in inventories is frequently the largest
current asset of merchandising (retail) and manufacturing businesses. (Donald E. kieso, 1998)

Two methods may be employed to ascertain the inventory quantity on hand, the periodic system
and the perpetual system. Both periodic and perpetual inventory system are measure cost by
several methods. Those are specific identification, average cost, first- in first out and last in first
out methods.

This study will focus on the identifying the basic accounting system used by small enterprises in
Gondar town administration.

1.2 Statement of the problem

Most of the small business enterprises handle their business traditionally. They do not have any
knowledge of accounting or modern business, all large or small business have to establish
accounting system in order to produce financial statements so as to give precise information for
personal or group in a business and satisfy to the external parties. In addition to this, accounting
system provides information to understand better how the business has get and help to the
management of the organizations to plan for the future of the business.

In this study we will evaluate small enterprises which doesn’t apply accounting system or those
which know accounting system and applied in their business.

According to the research conducted on small enterprises’ accounting system in Gondar Town
administration by Samson, (2008) concluded that those SEs in the city couldn’t have proper and
appropriate accounting recording system for their business operation. But the reason why they
are negligent to prepare business records and the internal control system status of these SEs is
still not well studied.

1.3 Objectives of the study

In general, this study has general and specific objective.

1.3.1 General objective of the study

The general objective of this study will be to access the application of basic accounting system
on small enterprises in case of Gondar town.

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1.3.2 Specific objective of this Study
To achieve the aforementioned general objective, we will develop the following specific
objectives.

 To assess the attitude of SEs towards recording business events and transactions?

 To examine the basic financial statements prepared by SEs.

 To analyze the overall internal control structure of SEs.

 To assess the accounting system designed by SEs in the city.

we will analyze and answer the following research questions.

 What is the attitude of small businesses towards recording business events and transactions?

 What are the basic financial statements prepared by SEs?

 What is the overall internal control structure of SEs?

 What Accounting system does SEs are designed for their business operation?

1.4 Significance of the study

The outcome of this study will be provide important information in the area of accounting
system as having knowledge of accounting system in running business is most suitable solution
for the growth of business. The study will also provide information for the importance of
accounting system in the wise use of resources and for financial information to make possible
comparison as to know the profitability of the enterprises. So any person can be reads this study
as literature and understands the importance of accounting system. Other researchers can use this
study for further finding in this area.

1.5 Scope of the study

This study will conduct on Gondar Town of SEs on their basic accounting system they practice.
While conducting a research may generate a better result if it is conduct at a country level.
However, due to lack of budget and time, we are restricted to do the study in Gondar Town only.

1.6 Organization of the paper

This study will be organizing into five chapters. The first chapter presents the introduction parts,
background of the study, background of the organization, statement of the problem, objective of
the study, significance of the study, scope of the study, and organization of the paper. The second

3
chapter shows the review of related literatures while the third chapter deals with research
methodology. The fourth chapter contains the presentation and analysis part, and chapter five
presents about conclusion and recommendation.

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 Chapter two

Literature review

2. Theoretical review
Small businesses are a fast growing sector in economies worldwide. It faces unique problems
and it is necessary for them to have effective risk controlling system. They also provide a very
important contribution to the development of the country in general and the surrounding societies
and youth in particular.

There is high level of unemployment even with the skilled labor force. For instance, according to
2004 World Development Indicators, out of the total unemployment of the active labor force
26.9, 61.3 and 8.3 percent have complete primary, secondary, and tertiary education,
respectively, and this unemployed population is increasing from time to time as the population of
the country is increasing.

Gondar Town was established in 1516E.C during the rise of Fasiledes. The number of population
in the city in that time was high. Currently the total population of the city is reached more than
300,000. The unemployment rate in the past history of the city was very high even if currently it
is reducing. The responsible body for this matter is Gondar Town administration small
enterprises office and it also initiates unemployed youth to form a small business and work on it.

It is experience in the country that the poor households are the main participants in some kind of
informal sector ranging from small petty trading to medium scale enterprises, and due to the fact
that this sector uses intensive labor force and as well since it is the livelihood of most of the poor,
developing this sector argued to be a weapon to resolve the problem of unemployment and
poverty of a household (Jean-Luc, 2006).

Several studies noted different causes for poverty in a country. Some argued that the Cause of
poverty in developing economies among other things is that the poor does not have access to
credit for the purpose of working capital as well as investment for its small business (Jean-Luc
2006).

The government has recognized the importance of micro-enterprise development to the

overall economic growth of the country and poverty alleviation. It has established the Micro and
Small Enterprise Development Agency to co-ordinate and supports this sector. According to
Proclamation No. 33/1998, the Agency shall be involved in designing policies and strategies for
the development and expansion of the micro and small enterprise; study the demand for training
and conduct training; establish skill up-grading, technical and demonstration centers in different
regions of the country; and disseminate information to the entrepreneurs. However, these

5
enterprises require adequate flow of institutional credit to finance both short-term operating
expenses and long-term investment needs.

To this end many developing economies have developed and have been providing credit to the
poor and small business through micro-finance schemes. In Ethiopia several institutions have
established and have been operating towards resolving the credit access problem of the poor
particularly those participates in the small business activities.

In addition to addressing poverty and food security issues, micro-enterprises teach the poor new
skills and help them generate greater savings for investment and promote inter-sectorial linkages.
According to a survey by the Central Statistical Authority (CSA) in 48 towns in 1997, there were
584,813 micro-enterprises and 2,731 small-scale enterprises in Ethiopia employing over 739,898
workers.

Since small enterprises have a great role to the economy of the given country, it matters to the
economy whether they work well or not. However, with the support of micro-finance
institutions, small enterprises may not work by themselves due to capital constraints. If a given
small enterprise is work well in addition to the help of micro-finance institutions it is also
assumed to be the accounting system of the business is well, which is the subject area of this
study.

2.1 Accounting Cycle

Accounting process is a complete sequence of accounting procedures that are repeated in the
same order during each accounting periods.

It +begins with journalize transaction and concluding after closing trial balance. In general
accounting process includes:

 journalizes transaction: Analyze business transactions as they occur and record them

promptly in a journal.

 Post to ledger accounts: Transfer debits and credits from journal entries to ledger

accounts.

 Prepare a work sheet: Being with a trial balance of the ledger, enter all necessary

adjustments, sort the adjusted account balances between income statements accounts and

balance sheet accounts, and determine the net income or net loss.

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  Prepare financial Statements: utilize the information in the worksheet to prepare an

income statement a statement of owner equity, and a balance sheet.

 Adjust and close the accounts: Using the information in the worksheet as a guide, enter

the adjusting entries in the journal. Post these entries to ledger accounts prepare and post

journal entries to close the revenue and expense accounts into the income summary

account and to transfer the net income or net loss to owner’s capital account. Also

prepare and post a journal entry to close the owner’s drawing account in to the owner’s

capital account.

 Prepare an after closing trial balance prove that equality debit and credit balance in the

ledger has not been upset by the adjusting and closing procedures.

The financial statements are the means of conveying to management and to interested outsiders a
concise picture of the profitability and financial position of the business. (R. Meigs, 1990).

After the effect of the individual transactions has been determined, the essential information is
communicated to users. The accounting statements that communicate this information are called
financial statements. (Fess Warren, 1984)

2.2 Inventories Valuation

Inventories are good acquired and held for sale to customers, and inventories are goods which a
business buys for the purpose of selling to customers. The description and measurements of
inventories require careful attention because the investment in inventories is frequently the
largest current asset of merchandising (retail) and manufacturing business. (R. Meigs 1990)

2.2.1 Inventory system

There are two alternative approaches or systems as to the determination of inventory, perpetual
and periodic inventory system. Under the periodic system, no attempt is made to record the cost
of inventories sold until the end of the period. It is only by detailed listing of inventory on hand
at the end of the accounting period that a determination is made of the cost of inventory on hand
at the end of period.

On the other hand, the perpetual inventory system uses accounting records that continuously
disclose the amount of the inventory. Regardless of the care with the perpetual inventory records

7
are maintained, their accuracy must be tested by taking a physical inventory of each type of
commodity at least once a year. The records are then compared with the actual quantities on
hand and any differences are corrected.

2.2.2 Inventory valuation methods

The price of many kinds of merchandise are subject to frequent change when identical lots of
merchandise are purchased at various dates during the year each lot may be acquired at a
different cost price.

There are several acceptable assumptions of inventory valuation methods, four of the most
common will be considered each assumption made as to the cost of the units in the ending
inventory leads to a different method of pricing inventory and to different amounts in the
financial statements. The four assumptions to be considered are, specific identification, average
cost, and first in first out and last in first out.

2.3 Internal control system

A system of internal control includes all measures taken by an organization for the purpose of :
(1) protecting its resources against waste, fraud, or inefficient use, (2) ensuring the accuracy and
reliability of accounting and operating data, (3) securing compliance with managements policy,
(4) evaluating the performance of all division of the company. In brief, the system of internal
control includes all measures and procedures that enable an organization to operate in
accordance with management plans and policies.

Internal control falls in to two broad categories accounting control and administration controls.
Accounting control are measures that relate directly of the protection of assets or to the reliability
of accounting information. Administrative controls are measure designed to increase operational
efficiency; they have no direct to increase operational efficiently, they have no direct bearing up
on the reliability of accounting records. However, sound administrative controls may have a vital
role in the successful operation of a business. (Robert F. Meigs 1990)

This study focuses on internal accounting control such as controls over cash, purchase, storing
and selling, likely to be diverted and used impurely by employees.

2.3.1 Principles of internal control

General control procedures which can be integrated throughout the accounting system and which
apply to all enterprises are;

 Competent personnel and rotation of duties; Successful operation of an accounting

system requires people who are able to perform the duties to which they are assigned.

Hence it is necessary that all accounting employees be adequately trained and supervised

8
 to perform their jobs. It is also advisable to rotate clerical personnel periodically from job

to job. Occasional relation is also very helpful in disclosing any irregularities that may

have occurred.

 Assignment of responsibility; each employee’s responsibility must be clearly defined.

There should be no overlapping or undefined areas of responsibility. For examples, no

one individual should be authorized to order merchandise, verify the receipt of the good

and pay the supplier.

 Separation of operations and accounting; Responsibility for maintaining the accounting

records should be separated from the responsibility for engaging in business transactions

and for the custody of the firm’s assets. By so doing, the accounting records serve as an

independent check on the business operations.

 Proof and security measures; it should be used to safeguard business assets and assure

reliable accounting data. This control procedure applies to many different techniques, i.e.

the use of safe keeping measure for cash and other valuable documents cash registers are

widely used in making the initial record of cash sales. The conditioning of the public to

observe the amount recorded as the sales or to accept a printed receipt from the sales

click increase the machines effectiveness as a part of internal control.

 Independent review; to determine whether the other internal control principles are being

effectively applied, the system should be periodically review and evaluated by internal

auditors. (Fess warren 1984)

2.3.2 Internal control over cash

Because of the high value of money in relation to its mass, and its easy transferability cash is the
asset most likely to be diverted and used improperly by employees. In addition, many
transactions either directly or indirectly affect its receipts or payments. It is therefore necessary
that cash be effectively safe guarded by special control.

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One of a major device for maintaining control over cash is the bank account. To get the most
benefit from a bank account, all cash receives should be deposited in the bank and payments
must be made by checks drawn on the bank or from special cash funds. When such system is
strictly followed, there is a double record of cash, are maintained by the business and the other
by the bank.

The forms used by a business in connection with a bank account are a signature card, deposit
ticket, check and record of checks drawn.

Signature card: is a card with signature of persons authorized to draw on a certain bank account.
The account the card is used by the bank to determine the authorized of the signature on checks
presented to it for payment

Deposit ticket: the details of a deposit are listed by the depositor on a printed form supplied by
the bank. It may be prepared in duplicate, in which case the copy is stamped or initialed by the
bank’s teller and given to the depositor as a receipt. Check is a written instrument signed by the
depositor, ordering the bank to pay a certain sum of money to the order of a designated person.
Check usually numbered in sequence to facilitate the depositor’s internal control.

Record of checks drawn: A memorandum record of the basic details of check will be prepared at
the time the check is written. Each type of record also provides spaces for recording deposits and
the current bank balance.

Bank reconciliation: The bank reconciliation is an important part of the system of internal control
because it is a means of comparing recorded cash, as shown by the accounting records, with the
amount of cash reported by the bank. In thus provides for finding and correcting errors and
irregularities. Greater internal control is achieved which the bank reconciliation is prepared by an
employee who does not take part in or record cash transactions with the bank. Without a proper
separation of these duties, cash is more likely to be embezzled.

2.3.2.1 Internal control of cash receipts

Cash receipts consist primarily of two types: cash received through the mail as collection of
accounts receivable, and cash receivable over the counter from cash sale.

cash received through the mail: it should be in the form of checks made payable to the company
when the mail is first opened an employee should stamp the back of each check with a restrictive
endorsement stamp, indicating that the check is “for deposit only” in to the company bank
account. This restrictive endorsement prevents any one else from being able to cash the check or
deposit it in to another bank account.

Cash receivable over the counter: cash sales should be rung up on a cash register located so that
the customer can see the amount recorded the register has provided assurance that an immediate
record is made of all cash sales. (Walter B. Meigs, 1990)

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Cash short and over; the amount of cash actually received during a day often does not agree with
the record of cash receipts. Whenever there is difference between the record and the actual cash
and no error can be found in the record, it must be assumed that the mistake occurred in making
change. The cash short or overage or is recorded in an account entitled cash short and over a
common method for handling such mistake is to include in the cash receipt journal a cash short
and over debit column in to which all cash shortages are entered, and a cash shortage and over
credit column in to which all cash shortage are entered.

2.3.2.2 Internal control of cash payments

It is common practice for business enterprises to require that every payment of cash be evidenced
by a check signed by a designated official. The official designated to sign checks should not be
given authority to approve invoices for payment to make entries in the accounting records. When
a check is presented to a company official for signature, it should be accompanied by the
approved invoices and vouchers showing that the transaction has been fully verified and that
payment is justified. When the check is signed, the supporting invoices and vouchers should be
stamped ‘paid’ to eliminate any possibility of their being presented later in support of another
check.

2.3.3 Voucher system

One widely used method of establishing control over cash payment is the voucher system. The
basic idea of this system is that every transaction which will result in a cash payment must be
verified, approved in writing, and record before a check is issued. A written authorization called
a voucher is prepared for every transaction that will require a cash payment, regardless of
whether the transaction is payment of an expense, purchase of merchandise or plant asset, or for
payment of liability. Vouchers are serially numbered so that the loss or misplacement of voucher
would immediately be apparent; the purpose in preparing a voucher is to assure that the suppliers
invoice is agreement with purchase order and our receiving report. The voucher system uses
vouchers, a voucher register, a file for unpaid voucher, a check register and a file for paid
voucher.

Vouchers: any document that serves as proof of authority to pay cash, such as an invoice
approval for payment or as evidence that cash has been paid, such as a canceled check.

Voucher register: After approved by the designated official each approved by the journal known
as a voucher register.

Unpaid voucher file: After a voucher has been recorded in the voucher register, it is filed in an
unpaid voucher file, where it remains until it is paid.

Paid voucher file: After payment, voucher is usually filled in numerical order in a paid voucher
file.

The voucher and management

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The voucher system not only provides effective accounting controls but also aids management in
discharging other responsibilities. For example, the voucher system gives grater assurance that
all payment is in liquidation of valid liabilities. In addition, current information is always
available for use in determining future cash requirement this in turn enables management to
make the best use of cash resources. Invoice in which cash discount are allowed can be paid
within the discount period and other invoice can be paid on the final day of the credit period,
thus reducing costs and maintaining favorable credit standing. Seasonal borrowing can also be
planned more accurately with a consequent saving in interest costs.

2.4 empirical Review

Even though there is no globally accepted common definition to SEs, they are always playing
significant

roles in the real Gross Domestic Product (GDP) growth, new job creation and reduction of
poverty in the global

economy (Karadag, 2016). Peter Drucker, the father of post war management thinking said that
small enterprises represent the main means of economic development. Those small businesses
contribute extremely to achieving the basic goals to any national economy, becoming the
backbone of social and economic progress International Journal of Scientific and Research
Publications, Volume 9, Issue 11, November 2019

(Druker, 2009 cited in Neagu, 2016). This is supported by Association of Chartered Certified

Accountants/ACCA report stating SEs as the backbone of the global economy in the effects of
the global economic crisis of 2008-9 (ACCA, 2010).

In order to survive, small-scale owners and managers need updated, accurate and timely
accounting information. Accounting system are responsible for analyzing and monitoring the
financial condition of the firm preparation of documents necessary for tax purposes, providing
information to support the many other organizational function such as production, marketing,
human resource management, and strategic planning. Without such system it will be very
difficult for small business enterprises to determine performance, identified customers and
suppliers account balance and forecast future performance of the organization, (Mohamed
Amidu, 2002 EC.)

In addition to the accounting system, Mohamed Amidu′s research work tends one of the
complaints by business and their organization is the amount and complexity of the various
regulatory and administrative obligations that have to be observed by enterprises. Small scale
enterprises suffer disproportionality from the regulatory burden compared to larger companies,

12
since smaller enterprises often do not have sufficient financial and human resources to manage
their obligations in the most efficient way.

Apart from the advantages of accounting system to the small enterprises which is already
explained in Amidu’s research, this study describes and understand whether small enterprises
know and apply the major elements of accounting system in their business.

2.5 Research gap

As it is described above, many studies were conducted on the application of basic accounting
system on small enterprises in our country. For instance, Samuel conducts a research in Dire
Dawa regarding the application of basic accounting system on small enterprise in his
investigation, he only considers accounting recording system. Now we will also include proper
internal control system in the study.

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Chapter 3

Research Methodology

3.1 Research design

This study will be employ descriptive research design and conduct on the application of basic
accounting system on small enterprises in Gondar Town.

3.2 Type and Source of data:

In this study the researcher used both primary and secondary source of data to achieve the
objective of the study.

We will use both questionnaires and interview method to collect primary data from respondents.

Questionnaires will be used as a major tool for primary data collection followed by interview
method.

On the other hand, secondary data will collect from annual reports and office documents of
enterprises.

3.3 Target Population

Population is any finite or infinite aggregation of individuals, not necessarily animate, subject to
a statistical study. (Douglas, 2010).

The target populations of this study will be about small enterprises which are found in kebele 02.
For answering the basic research questions and attaining the specific objectives of the study, the
researcher designed the following research methodologies;

3.4 Method of sampling and sample size

Sample is a set of data collected and/or selected from a statistical population by a defined
procedure. (William G.1977).

Currently76 SEs are operated in Keble 02 of Gondar Town administration. These enterprises are
engaged in different activities such as manufacturing, construction, service, trade and retail

14
activities. Because the numbers of enterprises are large, and it is difficult to conduct census
method. So we can use sampling method to select particular respondents from the studied area.

The number of SEs that the researcher taken as target respondents of the study is 43. This
number is not a randomly given amount rather it was calculated based on YEMANA sample size
determination formula.

i.e.= N/ 1+(N*(E)) ^2

n= 76/1+((76*(0.1)) ^2

= 43

We will use simple random probability sampling technique to select particular respondents of the
study.

3.4 Method of data Analysis:

Once the data will have captured from the two intended sources then data analysis will be
followed to make the raw data ready for interpretation and report writing.

Editing will be used for collected data to detect errors, omissions and unnecessary questionnaires
used in the field of editing techniques in the analysis.

Finally, collected data will analyze by descriptive method of data analysis, which will conduct by
using different methods like tables and percentage values.

3.5 WORK PLAN

N Activates Decem Janua Febr march April may

o ber ry uary
1 Problem
identification


2 Topic
selection

3 Litterateur
review


15
 4 Proposal
writing

5 Proposal paper
summation
 

6 Data
collection and
process 
7 Data analyze
and interpretation

8 Final report
writing

9 Paper presentation

3.6 COST BUDGET PLAN

No Item Quantity Unit cost in Total cost

birr
1 Pen 3 10 30
2 Paper 60 0.50 30
3 Flash 1 230 230
memory
4 Transportatio 100 100
n cost
-
5 Miscellaneou 70 70
s expense
-

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6 printing 60 1.5 60
7 telephone 100 100
8 Note book 1 70 70
9 total 670

Reference;

 BROCK AND PALMER (1981) ACCOUNTING PRINCIPLES AND

APPLICATIONS COMPLETE, EDTION 4TH

 DONALD E. KIESO AND JERRY J. WEYGANDT (1998), INTERMEDIATE

ACCONTING, EDITION 9TH

 FESS WARREN, PRINCIPLE OF ACCOUNTING, EDITION 16TH

 HERMANSON, EDWARD, AND SALMONSON (1989), ACCOUNTING

PRINCIPLES, EDITION 4TH

 HTTP:/WWW.GOV.ET/MICRO AND SMALL ENTERPRISES

DEVELOPMENT AGENCY

 PHILIP E. FESS AND CARLS WARREN, (1984), PRINCIPLE OF

ACCOUNTING, EDITION 14TH

17
  Douglas (2010), Population is any finite aggregation of individuals, not
necessarily animate.
 William G. (1977), Sample is a set of data collected and/or selected from a
statistical population by a defined procedure.

Our Research Questioners

UNIVERSITY OF GONDAR

SCHOOL OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

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This questionnaire is designed primarily with objective of collecting information which will be
used in writing up a senior research paper entitled ‘’application of basic accounting system in
small enterprise in case of Gondar Town administration.’’

Dear respondents

So you are kindly requested the right answer you think, since it contribute a lot to the success of
this study. And the final result will be available to you up on your request so that you may get
valuable information regarding the issue which is being researched since it offers a fresh and
independent observation.

I would also like to forward my thanks in advance to your co-operation.

N.B

There is no need of writing your name

Make a tick in the box, which you think is an appropriate response

Employees of DRCA

Part one: Demographic questions

Sex:

Male  Female 

Questionnaires prepared to Small enterprises

In what type of business activity, you enterprise engaged in?

Industry  Municipal activities 

Construction  Trade 

2. How Much capital do you have?

Up to 100.000  100,001 ---- 200,000 

200,001-----300,000  300,001 -----400.000 

over400, 000 

3. Do you record every business transactions?

Yes  No  I don’t know 

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4.If the answer for question 3 is No why?

Lack of knowledge  Lack of skilled man power 

Lack of awareness Other specific ------------

5. Using subsidiary ledger increase the efficiency of the accounting system

Strongly agree  strongly disagree 

Agree  Other  Specify ----------------

Disagree 

6. What types of financial statements issue by your enterprise?

Balance Sheet  Income Statement 

Both  Others  Specify ---------------------------------------

7. Every financial Statements Should accompanied by explanatory notes and Supporting

schedules

Strongly agree  strongly disagree 

Agree  I don’t know 

Disagree 

8. To what extent internal procedures applied by your enterprise?

Strongly  Never at all  weak 

Medium  I don’t know 

9. Internal control helps to safeguard assets and enhance the accuracy and reliability of
accounting records

Strongly agree  strongly disagree 

Agree  I don’t know 

Disagree 

10. What types of internal control procedures taken by your enterprise to ensure the reliability of
the accounting information?

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Accounting entries to be supported by appropriate documentation 
Separation of responsibility Made in the receipt, payment and recording 
others  Specify --------------------------------------------------------------------

11. Do you prepare receipt for cash collections?

Yes  no  I do not know 

If no, why? __________________________________________________________________

12. Does your organization prepare bank reconciliation?

Yes  no  I do not know 

If n why?______________________________________________________________

13. Does your organization issue purchase order before purchase made?

Yes  no  I do not know 

14. Does your organization properly authorized payment voucher and supporting documents
properly authorized before payments?

Yes  no  I do not know 

If no,why?__________________________________________________________________

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