Abstract:
Accounting practices are employed to generate accurate and timely financial
statements for Small and Medium Enterprises (SMEs), facilitating the performance of
accounting reports. However, the use of accounting practices in the SME sector
cannot be widely seen in developing countries like Sri Lanka. Hence, this research
aims to identify the factors that are affecting the accounting practices of SME in Sri
Lanka. Researchers have mainly identified variables such as the firm’s size,
technology, level of education, and government regulations. The objective of this
study is to identify the relationships among accounting practices and identified
independent variables. A total of 100 respondents were selected through a
convenient sampling technique and the data was collected through a questionnaire.
The findings of the descriptive analysis, correlation and regression analysis confirmed
that the level of education and firm size only impact the accounting practices of the
SME in Sri Lanka. The researchers recommend that there is an increasing need to
take necessary actions and policy formulations to enhance the literacy of SME
owners, especially regarding the need to adhere to accounting practices in ensuring
sustained business existence.
