Question

As a student of financial accounting, critically analyse how the current pandemic would affect accounting in small and medium scale enterprise around the world

Answer 1

COVID-19 pandemic has shaken the economy. Due to coronavirus pandemic small industries and businesses has impacted which has slowed down the economy. According to the statement of World Trade Organisation (WTO) the global trade around the world is likely to decline steeply between 13 per cent and 32 per cent in 2020. Since most of the economies across the globe battling with the current pandemic and thus ceasing to operate due to depleted cash reserves and insurmountable costs. The micro, small and medium enterprises are affected more by the current lockdown. Due to the current pandemic they are experiencing serious cash flow concerns and also fearing will not reopen again, despite the efforts and support from their government through the emergency business loans and grants.

Governments across the world wide are pumping investments into the economy for stimulating a floundering economy. The excess debt levels can only give a temporary solution to their concerns, however the SMEs the survivability in the long term and the economy's recovery rate would depend on whether there is a second wave of infections from the virus, if and when there will be an availability of the vaccine, and the extent to which entrepreneurial and production activity will grow. To deal with this situation the businesses can take an extension of time limit provided by regulators in regard to financial results, GST return, submission of corporate governance report, etc. It would be helpful in resolving the concerns to a certain extent, but a relief in terms of time extension must also be provided to banks, financial institutions, NBFCs for non-performing assets assessment, and as a result the lenders and companies would get some relief in facing the liquidity crises