Determinants of accounting practices of Small and Medium Enterprises (SMEs) in Sri Lanka

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.