The aim of the paper is to examine the reasons SMEs prepare financial statement (FS) in order to contribute to the body of knowledge that exist in the area of SMEs accounting using survey research. The study is based in descriptive, quantitative, cross-sectional study using a sample of 120 respondents (managers and agent of SMEs) selected through convenient sampling method. Data was obtained using self-designed questionnaire (Yes/No and Likert scale) and administered at the work places of the respondent. Data was analysed using frequencies and percentages and presented in Tables. The results indicate that some SMEs in the survey do not prepare FS. The most important reasons for preparing FS are to access profitability followed by growth/performance. The most important source for preparing FS are internal by accounting expert followed internal with outside advisor. The most important factors that influence the selection of external sources for preparation of FS are personal contact followed by recommendation from other business. The study recommends accounting training programmes for SMEs entrepreneurs to be able to improve their accounting practices for managing SMEs. Future studies should replicate current study using structural models in a casual study.
Small and Medium Enterprises, financial statement, profitability
