Effect of Accounting Practices on Financial Performance of Small Medium Enterprises in Rwanda

The overall objective of this study is to investigate how poor record keeping can cause the negative failure of SMEs in Musanze District of Rwanda; to evaluate the extent to which low level of budgeting techniques can lead to poor ability of SMEs expansion in the particular area. The study adopted a case study research design to enhance an in depth investigation of the targeted population of the SMEs residents in Musanze District, Northern province, Rwanda. 60 respondents were arrived at using proportionate stratified. The study gathered primary data through open and closed end questionnaires. Over 70 Questionnaires were distributed to 60 SMEs owners out of which 60 questionnaires were valid and analyzed using Likert scale. To point out on how record keeping can be very vital to SMEs, it is good because it helps SMEs to achieve her goals and objectives and on other hand a lot of SMEs owners in Musanze lack accounting skills, they keep their record manually thus no accounting system they were using. The researcher recommended that SMEs owners in Musanze District should try to buy latest software for keeping records in their firms and hence equipping themselves with essential managerial skills which are necessary for the expansion of SMEs.