UNDERSTANDING BASIC ACCOUNTING PRACTICES IN MICRO ENTERPRISES: INSIGHTS FROM MIZORAM, NORTH EAST INDIA

Abstract

Every microenterprise must understand and use fundamental accounting procedures to guarantee that their operations operate effectively. Accounting procedures, in addition to improving a company's business success, also represent the results of its operations and the statement of financial condition. As a result, a thorough grasp of financial performance may assist microenterprises not only in evaluating and monitoring their business operations, but also in making key decisions. The goal of this article is to investigate the use of fundamental accounting techniques by microenterprises in Mizoram. Data were obtained from 200 microenterprise owners. The data were analysed in frequency and percentage form using The Statistical Package for Social Sciences (SPSS). The data revealed that the majority of microenterprises used a fairly rudimentary accounting system, keeping both cash and accrual accounting and documenting both electronically and manually. The study also revealed that the majority of microenterprises completed the accounting cycle by maintaining records of their daily business transactions and preparing financial statements at the end of the month, namely profit and loss account. With such well-maintained and full financial records, it is possible to make reasonable and good decisions, which may lead to corporate success. Furthermore, this study discovered that the most significant obstacles encountered by microenterprises were a lack of accounting expertise, as well as a lack of resources, absence of guidelines for record keeping and financial reporting and time to prepare financial statements for their operations. Therefore, in order to maximize the efficiency of their financial management and entrepreneurial growth, microenterprises were advised to enhance their accounting expertise and broaden their knowledge by enrolling in any training program or seminar on accounting procedures.​