Full Project-THE RELEVANCE OF ACCOUNTS DEPARTMENT IN A SMALL AND MEDIUM BUSINESS ENTERPRISE A CASE STUDY OF SOME SELECTED SMES IN ETSAKO WEST LOCAL GOVERNMENT AREA

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CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

From time in memorial man has consistently improved on the ways transactions are carried out. Particularly, the improvement in the increasingly complexity of daily transactions by man started in the mercantile era, that is, the period of the birth of modern commerce. This period witnessed a boom in merchandising, leading to large volumes of exchange of goods and services between individuals and across various frontiers, this development led to the growth of and formal recording of transaction involving exchange of currency(s). However, the recording transactions in books of accounts known as book keeping in line with double entry principle dates back to the 14th century AD when Italian merchants began to use the double entry system to record their transactions (Igben, 2004). Nevertheless the earliest known double entry records which gave birth to modern financial accounting as noted by Igben (2004) is the account of “stewards of the commune of Genoa” in the year 1340. The implication of this is that modern accounting practices can be traced to Italian origin as it was called “Italian method”. However, for financial accounting, several definitions exist, it can simply be defined as the process of collecting, recording, presenting and analyzing and interpreting financial information for the users of financial statements (Igben, 2004). As transactions are carried on and they are recorded in statements, which are usually contained in source documents like invoices, bills, debit notes, receipts vouchers, credit note to mention but a few, such are recoded, presented and analyze/interpret for the purpose of transparency, accountability and understanding by the parties involved in the transactions

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