Accounting Practices in Small and Medium Enterprises and Financial Sustainability

Abstract

This research investigates the relationship between accounting practices and
financial sustainability in small and medium enterprises (SMEs), proposing a novel
framework that integrates behavioral accounting, cognitive load theory, and digital
minimalism principles. While prior research has focused primarily on compliance
and basic financial management, this study introduces the concept of ’cognitiveefficient accounting’—a methodology designed to optimize the cognitive resources
of SME owners while maintaining robust financial oversight. We develop and test a
hybrid approach that combines simplified double-entry bookkeeping with predictive
analytics and just-in-time financial decision support, specifically tailored to the
cognitive constraints and operational realities of SMEs. Our methodology employs
a mixed-methods design, combining quantitative analysis of financial data from
150 SMEs over a three-year period with qualitative insights from cognitive task
analysis interviews. The results demonstrate that SMEs implementing cognitiveefficient accounting practices show a 42