The effect of Accounting Information System to Small and medium size enterprises performance.
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This research study is aimed, based on empirical evidence, at measuring the relationship between the use of the Accounting Information Systems (AIS) by the Small and Medium Sized Enterprises (SMEs) and firms’ improved performance indicators and productivity within the Bamenda locality. This empirical study is based on a survey carried out among small and medium-sized firms to ascertain the extent to which development and implementation of accounting information systems had taken place, and subsequently an analysis was made as to how much this introduction may impact on improvement in outcome indicators and productivity.
As interesting results, we have found that there is a positive relationship among the SMEs that use AIS for SMEs as we analyzed its effect with respect to economic and financial performance, productivity and enterprise performance. In order to carry out our study effectively and efficiently, we targeted one Town popular and good in the North-West Region known as Commercial Avenue. We carried out our sample on 20 Small and medium size enterprises with the help of questionnaires, and using a descriptive sample design, the data was analyzed using SPSS with the help of regression analyses.
This research provides value added in accounting literature given the scarcity of works dealing with the relationship between the application and use of AIS and performance and productivity indicators in SMEs at Commercial avenue
Keywords: Accounting Information Systems (AIS), Small and Medium-Sized Enterprises (SMEs), performance measures (economic and financial performance),, productivity, decision making.
In this chapter, we are going to see a general overview of our work. We shall be able to outline what our study is all about, where it was studied as well as the objective of the study. Research questions and hypothesis shall be developed here so as to enable us carry out our research.
We shall also see the importance of this research to students, employees and managers (the company and its stakeholders).
1.1 Background of the study
From a general perspective, an enterprise can be defined as any company, business, organization or other purposeful endeavor. Generally, enterprises has specific motives for its existence. Some are out for Profit making while other could just be out for the wealth of the society or members within themselves.
Enterprises makes use of information so as to ensure effective communication. Stakeholders most especially makes use of the various report presented at the board meeting or for a particular purpose so as to make a particular decision or get his interest. Most of this information are gathered by the accounting or finance department and constitute what is termed an Accounting information.
Accounting information therefore are to a simple term any financial or material information gathered and prepared by the Financial manager or the accountant so as to present a report to the various stakeholders in need of it at an appropriate period.
In order to reduce paper work, and ease referencing, some enterprises (especially large enterprises) makes use of a system. This system differs from enterprises as well as jobs but most at times they are out to produce almost the same outcome based on its design. For our case we shall be talking of an Accounting Information System which is to a simple language is the various processes undertaken to collect, analyze and present the output to various users.
An accounting information system is one that captures, stores, manipulates, and presents data about an organization’s value-adding activities to aid decision makers in planning, monitoring, and controlling the organization
Therefore, an Accounting information system must constitute key features such as
- Collecting the data
- Analyzing the data
- Reporting or presenting the information
- Storing the information for future use
We should note that the financial Accounting system must be prepared based on the Generally Accounting Accepted Principles (GAAP).
1.2 Problem Statement
Most small and medium size enterprises make use of accounting information without knowing the importance it plays into their enterprises. They even find difficulties in assessing the importance of incorporating the need of designing a system for such an accounting information.
Thus, our research is based on finding if an Accounting Information System has an effect on Small and Medium size enterprises performance as well as finding how we can convince those enterprises to design an Accounting Information System to best suit their activities carried out.
For this to be carried out effectively, we shall make use of three key variables which will be used to design our hypothesis. They include the financial and economic performance, the productivity of the enterprise and the stakeholder’s decision making.
1.3 Research Question
In order to successfully carry out our studies, some research questions have been developed so as to help this study. These research questions have been divided into two parts; the main research question and the specific research question.
1.3.1 Main Research Question
What will be used as our main Research Question is ‘What are the effects of an Accounting Information System into Small and Medium size enterprises performance?’
1.3.2 Specific Research Question
With respect to our main research question, other specific questions have been formulated to accompany the main research question which will help in carrying out our study.
- Does an AIS creates an impact on the SME productivity?
- Do small and medium enterprises using AIS have better economic and financial performance?
- What influence does an accounting information system has in decision making of Stakeholders?
1.4 Objective of our Study
These objectives are gotten from our Research questions laid above. Therefore, we shall be talking of the Main Objective and the specific objective.
1.4.1 The Main objective
Our main objective shall be to determine the impact of an Accounting Information System on Small and Medium size enterprises performance
1.4.2 The Specific objectives
These are those objectives which will help us attain our main objective to be used in our study. They include
- To evaluate the influence an accounting information system has on Stakeholders’ decision making
- To evaluate the impact of AIS on SMEs productivity.
- To assess the impact an AIS has on SMEs economic and financial performance
These are assumption put in place so as to guide us in our research.
- Accounting information System has an impact to a Small and Medium size enterprises performance
- Accounting information system creates an impact in SMEs productivity increase
- There is a relationship between AIS and SMEs economic and financial performance
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