Bank Reconciliation Statements, Accountability and Profitability of Small Business Organisation

Abstract

The study examined bank reconciliation statement, accountability and profitability of small scale business entities. Bank Reconciliation Statement is a statement prepared to reconcile the difference between the balances as per the bank column of the cash book and cash book of the organization. Small scale business entities, despite the fact that the most tormenting problem of most of them is lack of finance yet they fail to keep proper accounting records and fail to reconcile their books What prompted this research is the excessive charges made by the banks to the customers’ accounts without intimation and the need for Small Scale business entities to maintain proper books of account. Data were collected using questionnaire and analyzed statistically by using the Software Package for Social Science (SPSS) and chi-square technique.  The results reveal that reconciling bank statements improve accountability and impact positively on the profitability of the small scale business entities. The implication of this study is that Small scale business entities should reconcile their bank statements on monthly basis, this will help them to know the following: their bank balances any particular point in time, when bank is charging them excessively and to avoid unnecessary cost. Use of professionals and development of software will be of credit to the business on the long run.Banks should encourage small scale business firms to reconcile their books by providing bank statements at appropriate time.

Keywords: Bank reconciliation statement, Excessive bank charges, accountability, profitability and small business entities