An Approach to Reducing Accounting Costs for Small Businesses

Authors

  • J. Gregory Bushong Wright State University
  • David W. Cornell University of Missouri- Kansas City

Abstract

Many small privately-held businesses (referred to as small businesses henceforth) prepare financial statements for use by external parties such as banks. Often the small businesses do not have the expertise to prepare these financial statements, instead employing independent certified public accountants (CPAs) for the task. A CPA preparing financial statements in this manner must attach a report stating the degree of responsibility he/she is accepting /or the statements.  Modification of this report results if the statements are not in conformance with generally accepted accounting principles (GAAP). Owners of small businesses generally elect to have their financial statements produced following GAAP to avoid the modification of the report.  This has become a costly decision, however, as the complexity of GAAP has increased the purpose of this article is to help small business owners reduce the cost of preparing their financial statements. The article begins with a discussion of the importance of selecting the right CPA to produce the financial statements. The article then reviews the CPA's level of association with financial statements and the reports that result therefrom. Finally, the article closes with possible reduction of accounting costs through the use of other bases of accounting.

References

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Published

1996-06-11

Issue

Vol. 7 No. 2 (1996)

Section

Articles

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How to Cite

An Approach to Reducing Accounting Costs for Small Businesses. (1996). Journal of Small Business Strategy (archive Only), 7(2), 45-58. https://libjournals.mtsu.edu/index.php/jsbs/article/view/341