Accounting Practices Of Small And Medium Sized Enterprises And Its Effect On Access To Finance In Addis Ababa

This study seeks to examine the accounting practice of small and medium sized enterprises andrnits effect on access to finance in Addis Ababa. It identifies the sector as the key to unlocking therneconomic potentials of the country. However, the sector is constrained by a number of factorsrnwhich include among others minimum or poor accounting practice and difficulty in accessingrncredit facilities. For the achievement of the objective of the study quantitative research approachrnparticularly survey design were used and the data obtained were analyzed using descriptivernstatistics and ordinary least square regression.rnThe study revealed that the majority of the studied firm has no formal accounting practice. Thernstudy also revealed that the major sources of finance available for the establishment andrnexpansion of SMEs in Addis Ababa are personal saving, microfinance, money from friends orrnrelative, iqub and less from banks. The result of ordinary least square regression evidences thatrnvariables such as capital, manager education level and age of the firms are the significantrndeterminants of firms’ accounting practices whereas the problems significantly associated withrnaccess to bank credits are the demand for collateral, accounting practice or formal accountingrninformation and age of the firm

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