Abstract:

The literature has shown that access to finance and capital is one of the major problems hindering the development ofMicro, Small, and Medium-sized Enterprises (MSMEs). Poor quality of financial records is perceived as a source of MSMEs' lack access to banking credit. MSMEs owners and managers often lack the skills and knowledge needed to apply for a loan and meet bank standards.This study aims to investigate the status of accounting system in the MSMEs in the trading sector in Padang City, West Sumatera. To achieve this aim, this research developed structural questioners, which then randomly distributed them into 100 owners, managements and employees of trading MSMEs in four largest traditional markets in Padang. This study found that most of the MSMEs owners and managements have acknowledged the importance of financial managementthrougha good accounting information system for their business and haveapplied it with various quality of financial records, ranging from very simple bookkeeping records to those completely fulfilled the formal accounting standard. Nevertheless, this study shows that lack of qualified accounting personnel and financial management facilities caused by a lack capital and financial resources are some key obstacles for implementing a good accounting system in MSMEs.  

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