BEDATU TESFAYE2025-06-252025-08https://rps.wku.edu.et/handle/123456789/46363This study examined the role of accounting practices in enhancing the financial performance of micro and small enterprises (MSEs) in Wolkite Town. The research employed a mixedmethods approach, utilizing questionnaires with 116 MSE owners and interviews with two MSE owners to gather data on current accounting practices, their impact on financial performance, and the challenges faced in their implementation. The scope of the study encompassed the examination of accounting practices, their implementation, and their impact on the financial performance of small and micro enterprises in Wolkite town. The study found that effective accounting practices have a significant positive correlation with the financial performance of MSEs. Challenges identified included a lack of accounting knowledge, the high costs of accounting software/tools, limited access to professional accounting services, time constraints, regulatory complexity, and inconsistent cash flow. The study concludes that enhancing accounting practices is crucial for improving the financial performance and sustainability of MSEs in Wolkite Town. It recommends the implementation of training programs on basic accounting, affordable accounting software tailored for MSEs, government subsidies for financial management tools, simplified tax regulations, and the establishment of peer learning networks to support MSEs in adopting effective accounting practices.enAccounting practicesfinancial performancemicro and small enterprises (MSEs)financial literacyWolkite TownEthiopia.Thesis