On The Small Business Accounting System Choice

The ordination and implementation of <> brings about the issue that how small size enterprises choose a proper accounting system. Thereupon, this article focuses on the study of solving the dilemma that how a small size enterprise shall adopt one proper accounting system from <> and <>.The correlative theory in Institutional Economics and Accounting, provide the theoretical bases for small size enterprises making the choice of adopting an accounting system, which also decide the principles and factors considered by small size enterprises, when the decision is making. Which accounting system should be chosen by small size enterprises, the methodology of Contingency Theory will be applied in the research process. By comparing <> with <>, it is not difficult to find out that there are no much diversities in essence between these two systems. <> is more simplized, easier exercisable and more apt to statutes of revenue contrasted to <>. Moreover <> does not emphasize on providing accounting information for decision making to outside investors, stake holders, whereas, the reverse is the <>, which is required to provide useful accounting information to outside investors and stakeholders. As long as the differences between <> and <> are distinguished, small size enterprises shall adopt a proper accounting system from these two systems. The principles of small size enterprises selecting accounting system should be that, firstly, a range of rules should be followed, such as principal principle,objective principle,adaptive principle,evenhanded principle and cost-benefit principle. Secondly, the factors, which will affect small size enterprises, also should be considered, including a range of outside factors as accounting environment, related interest parties, industry environment etc. and also the factors inside enterprises. With respect to the integrated influences of both outside and inside factors, small size enterprises ought to exam these accounting systems by the method of flexibility in tactics, viz, on the premise of selection principles being followed and all sorts of outside and inside factors being measured, a proper accounting system would be adopted by small size enterprises.