ACCT 2250: Research on Management Accounting for Small Businesses

This report, prepared by a student for ACCT 2250, analyzes two research articles on the adoption and impact of management accounting in Small and Medium Enterprises (SMEs). The first article, focusing on Nigeria, explores the use of various management accounting techniques such as budgeting, cost accounting, and decision-making tools, and their positive impact on SMEs' performance, cost efficiency, and strategic decision-making. The second article, centered on Malaysia, examines management accounting practices including marginal costing, cost-volume-profit analysis, and ABC costing, highlighting their role in enhancing efficiency, employee motivation, and strategic decision-making within SMEs. The report includes implications of the research for a business professional, Paulina Presto, and reflects on the insights gained from the articles, emphasizing the importance of management accounting tools for effective business operations, cost control, and strategic planning. The student also reflects on the importance of management accounting tools for effective business operations and strategic planning, and how the insights can benefit her clients.

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Management accounting
Small and Medium sized enterprises (SMEs) in Management Accounting
3/30/2020

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Contents
MEMO.............................................................................................................................................2
Summary of the first paper..............................................................................................................2
The implications the research has on her clients.............................................................................4
Personal Reflection..........................................................................................................................4
Summary of the second paper..........................................................................................................5
The implications the research has on her clients.............................................................................7
Personal Reflection..........................................................................................................................7
References........................................................................................................................................9

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MEMO
To: Paulina Presto
From: Eferakeya Idowu
Date: March 30, 2020
Re: Research articles on Small and medium enterprises (SMEs) and the adoption of management
accounting in Nigeria.
Hi Paulina
Summary of the first paper
(Idowu, 2016): The article was written by Eferakeya Idowu, in the year May 2016. The
keywords used in this article are SMEs, Cost accounting systems, management accounting
techniques, and Reporting system.
The paper discusses the adoption of management accounting in Nigeria in small and medium
Enterprises. There were several management accounting techniques which are adopted by
Nigeria such as budgeting, cost accounting, pricing policy techniques, budgeting, decision-
making techniques, etc. (Maziriri and Mapuranga, 2017). In the short run and long run, this
management accounting tool is beneficial for the company as they impact tremendously on the
performance and the sustainability of the company.
In the small and medium business of Nigeria, rapid changes in the business environment are
done so management accounting helps the company in evaluating diversification of the products
and helps in taking the strategic decision of the company. The management accounting tool helps

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SMEs in Nigeria to manage their scare resources effectively, make effective decisions and do the
things innovative things in the company which helps the small companies to perform better and
appraise their performance. Management accounting gives a competitive advantage to the
companies as it helps the companies to maximum the cots efficiency and also minimized the risk
in the company. The competition in the market has increased in Nigeria as there were many large
companies and even the small and medium enterprises too so with the management accounting
tools the company the objectives of the company can be achieved easily and they attain the goals
by co-coordinating the management accounting techniques (Azudin and Mansor, 2018). the
techniques of the management accounting help in ensuring the SMEs to be more effective in
their results and provide requisite tools in the company to perform the activities and operations in
the company deliberately.
Nigeria has adopted the tools and techniques of management accounting as this tool is low
adoption for Nigeria and helps the companies in making the budgets, planning and controlling
the things. It not only helps the company related to the pricing policy strategy but also helps in
taking the decision making process among the SMEs (Lavia Lópeza and Hiebl, 2015). In the
long term, management accounting tools help in giving a positive impact on improving the
outcomes and processes of the company.
MA techniques also help SMEs in Nigeria in serving the strategic objectives of the companies
and when the nature of the business environment changes then these strategic plans are aligned
with the strategic goals of the company to remain competitive in the market. The economy of
Nigeria has developed its economy by using contemporary management accounting in the SMEs.
SMEs have adopted cost accounting which is the technique of the management accounting tool
only and it helps analyzing the profitable and profitable activities within the company. Cost

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accounting helped Nigeria SMEs in evaluating the periodical of profit and losses (Cuzdriorean,
2017). This technique of cots accounting also helps the small companies in Nigeria in controlling
the material and supplies. The plan can be easily made through the cost accounting and helps in
making the decisions good. The budgets are also set on the management techniques so the SMEs
also set the budgets which help them in managing their money effectively and helps in meeting
the targets. The SMEs have lack of resources due to the lack of funds in Nigeria the technique of
budget helps the company in allocating the resources of the project appropriately.
The implications the research has on her clients
This article has a good implication on the Paulina and her clients as she can use the information
from the article and can manage her business functions effectively. She has adopted the
techniques of management accounting like cost accounting, budgeting, and effective decision
making which helps Paulina in effectively doing business operations (Armitage, et al., 2016). By
making the budget in the company she and her clients help in achieving the targets and also
minimizing the cost which helps in increasing the efficiency of their business. The academic
knowledge gain from this research helps her in operating the day to day functions of the
company.
Personal Reflection
After reading this article it made me realize that there are many uses of the management
accounting tools and techniques so it should be adopted by the companies no matter it small,
medium or large. The tools of management accounting help in doing the proper planning in the
Nigerian SMEs and helps in executing the effective operations of the business. There are several
tools in management accounting like cost accounting, decision making, budgets, etc. so all this

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tool have their importance in the company which I have learned. I have seen that a major role is
played by the cost accounting in the company as it helps in evaluating the profit and loss in the
company. I have also analyzed that budget is also an important tool of accounting as it helps in
making the planned for the uncertain future and helps the SMEs in appropriately controlling the
things.
From this article, I have also evaluated that decision making is the most important benefit of the
accounting tool so companies also used management accounting for making effective decisions.
I have seen that management accounting is not mandatory by any law but it should be adopted by
the companies so that goals and objectives in the company can be attained. There were several
problems in the companies which occurs so by adopting the tools and techniques of the MA the
underlying cause can be ascertained.
I have also analyzed that management accounting helps in understanding the financial data in the
company so SMEs also used this accounting tool for managing the profits and loss. The greater
accuracy in the work has achieved through the tools and techniques of the MA and I have seen
that it helps the SMEs in reducing the cost and saving the time.
Summary of the second paper
(Ahmad and Zabri, 2016): The article was written by Kamilah Ahmad and Shafie Mohamed
Zabri in November 2016. The keywords used in this article are SMEs, Management accounting
practices, manufacturing sector, Malaysia.
The paper discusses management accounting practices that play an essential role in the company
as they add value to the managerial tool and also helps in improving the performance of the
company. In this article adoption of the management accounting practices in the small and

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medium enterprises has done so that they can enhance their performance (Jamil, et al., 2015).
With the use of strategic management accounting and the decision support system the difference
between the small and medium firms has been done.
In Malaysia, the management accounting practices are used in the SMEs in which several
techniques are included which are marginal technique costing, cost volume profit analysis,
internal rate of return, accounting rate of return, etc. (Cuzdriorean, 2017).With the help of this
accounting tool, the Malaysian SMEs help in operating their day to day functions. The strategic
decision is also made through management accounting which helps in determining the expenses
and the incomes of the SMEs. Management accounting practices also help SMEs in Malaysia to
control the management entity.
Management accounting practices also help in better services to the customers and helps in
organizing things in a better way. This tool not only helps the company related to the pricing
policy strategy but also helps in taking the decision making process among the SMEs (Ahmad,
2017). In the long term, the management accounting tools help in giving a positive impact on
improving the outcomes and processes of the company.
SMEs in Malaysia have also adopted the practices of management accounting as it helps in
motivating the employees. In the SMEs, the employees are being rewarded in the Malaysian so
that they can feel motivated and works towards achieving the goals. The practices of the MA
help the companies in improving productivity and efficiency by using product costing
approaches (Ghorbel, 2016). Techniques like ABC costing have also used by the company which
has given several benefits to SMEs such as it helps the companies leading to the more
appropriate price decisions and eliminates the overhead which helps in reducing the cost of the

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things. For controlling the cost in the SMEs and for more accurate product costing ABC is used
as it provides the breakdown to the indirect cost.
The implications the research has on her clients
This article helps in gaining the information to Paulina and her clients as she can use the
information for increasing the efficiency of her business. In the article, the Malaysian SMEs are
using the budgets to make the decision effectively so Paulina also makes the budget to make
effective decisions in the company. In this article, ABC costing has also explained so this
research has implicated well to Paulina as it helps her eliminates the overhead which helps in
reducing the cost of the product and provides more accurate product costing (Broccardo, 2014).
Paulina has also motivated her clients by using the management accounting tool by giving
rewards and other benefits to their employees.
Personal Reflection
By reading this article I have analyzed that Management accounting practices are very essential
in the SMEs as it helps in providing them the guide regarding how to operate the day to day
functions. The company using tools likes budgeting, ABC costing, pricing policy strategy helps
the company in making effective decisions.
I have learned that ABC costing is the most appropriate accounting technique for SMEs as it
helps in reducing the cost of the product in the company reducing the overhead expenses. I have
analyzed in that article that in Malaysia the SMEs are using the pricing policy too so from that I

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have learned that it helps the companies in appealing to the customers by setting the prices based
on the value, cost, competition, and demand.
From that article, I have also evaluated that by adopting practices like ABC costing and Pricing
policy the SMEs helps in achieving a good target return on investment, achieves a good market
share and helps in stabilizing the price of the product. By using the practices of management
accounting the business can go forward to the future and can compete easily with its competitors.
I have also evaluated that articles are easy to read if the concept and the terms of management
accounting are known. In both of the article, the SMEs are getting the benefit only by adopting
the tool and techniques of the management accounting and help them in enhancing their business
efficiency and productivity to the future.

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References
Ab Rahman, N. A., & Ramli, A. (2014). Entrepreneurship management, competitive advantage
and firm performances in the craft industry: concepts and framework. Procedia-Social
and Behavioral Sciences, 145, 129-137.
Ahmad, K. (2017). The implementation of management accounting practices and its relationship
with performance in small and medium enterprises. International Review of Management
and Marketing, 7(1), 342-353.
Ahmad, K., & Zabri, S. M. (2016, November). Management accounting practices among small
and medium enterprises. In Proceedings of the 28th International Business Information
Management Association Conference (Vol. 9, p. 10).
Armitage, H. M., Webb, A., & Glynn, J. (2016). The use of management accounting techniques
by small and medium‐sized enterprises: a field study of Canadian and Australian
practice. Accounting Perspectives, 15(1), 31-69.
Azudin, A., & Mansor, N. (2018). Management accounting practices of SMEs: The impact of
organizational DNA, business potential and operational technology. Asia Pacific
Management Review, 23(3), 222-226.
Broccardo, L. (2014). Management accounting system in Italian SMEs: some evidences and
implications.

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Cuzdriorean, D. D. (2017). The use of management accounting practices by Romanian small and
medium-sized enterprises: A field study. Journal of Accounting and Management
Information Systems, 16(2), 291-312.
Eferakeya, I. (2016). Small and medium enterprises (SMEs) and adoption of management
accounting in Nigeria. Journal of Social and Management Sciences, 11(2).
Ghorbel, J. (2016). The Relationship between the Profile of Manager and Management
Accounting Practices in Tunisian SMIs. International Journal of Academic Research in
Accounting, Finance and Management Sciences, 6(1), 61-72.
Ismail, N. A., & King, M. (2014). Factors influencing the alignment of accounting information
systems in small and medium sized Malaysian manufacturing firms. Journal of
Information Systems and Small Business, 1(1-2), 1-20.
Jamil, M., Zuriana, C., Mohamed, R., Muhammad, F., & Ali, A. (2015). Environmental
management accounting practices in small medium manufacturing firms. Procedia-Social
and Behavioral Sciences, 172, 619-626.
Lavia López, O., & Hiebl, M. R. (2015). Management accounting in small and medium-sized
enterprises: current knowledge and avenues for further research. Journal of Management
Accounting Research, 27(1), 81-119.
Maziriri, E. T., & Mapuranga, M. (2017). The impact of management accounting practices
(maps) on the business performance of small and medium enterprises within the Gauteng
Province of South Africa. The Journal of Accounting and Management, 7(2).