Financial and Management Accounting Practices in Small Business: An Exploratory Study in India
Das, Ashim Kumar
Dey, Nikhil Bhusan
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Small Business promotion has continued to remain an important and integral part of Indian development strategy since her independence. The concentrated policy emphasis upon small firms as a vital vehicle of progress draws upon this sector's crucial role in generating employment and income at the regional level and acting as a shock absorbed during period of economic crisis. In the current business environment, ﬁrms are faced with intensijﬁting competition locally and globally. It is vital in this environment that Small Business ﬁrms be equipped with appropriate and modernﬁnancial and managerial accounting practices in order for them to survive and remain proﬁtable. Growing literature on ﬁnancial and management accounting supports the argument that in small business, ﬁnancial & management accounting is one of the key issues. It not only increases the success rate but also aﬂects the level of performance of a business. This research paper reports an exploratory study by raising some queries on the ﬁnancial and management accounting practices of small businesses in India and attempts to _/ind empirical justification on the usefulness of these tools of accounting for decision making. The result of the study does prove that there is a wide gap between theory of ﬁnancial & management accounting and actual practices by the small business in India. The study also reveals that ﬁrms not doing well are less likely to have knowledge on different tools of ﬁnancial and management accounting.