CHAPTER I: INTRODUCTION

Context Information

An accounting information system is a collection of data and processing procedures that

generates required information for its users. It is a financial information system which
includes accounting terms, records instruction manuals flow charts programs, and reports
to fit the specific needs of the business (Bagranoff et al., 2010).

An accounting information system uses physical resources and other components to

transform economic data into accounting information to satisfy users' requirements. It is a
set of records, procedures, and equipment that routinely deals with the events affecting the
financial performance and position of the association. The current business world is
evolving due to rapid changes in the manufacturing process, customer demand, and
technological advancement. It is almost impossible to achieve competitive advancement
without Information Technology (IT). As the nature of business has changed, accounting
has also changed and businesses are now solely dependent on Accounting Information
Systems (AIS) for record-keeping and information management. (Harash, 2015).

Accounting information system is a formal medium for gathering, organizing and

communicating accounting information about an association's activities. AIS plays a
significant role by ensuring cost-effectiveness and valuable information for gaining a
competitive advantage to improve the efficiency of operations and decision-making
process (Romney & Steinbart, 2003).

AIS is a tool that uses the information technology (IT) or information systems (IS)
component to aid in directing the monetary and economic functions of the organizations.
Its main purpose is to acquire, process, and communicate data and information that is
crucial to the operation of the firms (Louadi, 1998).

AIS is a complete element that gathers primary data and transforms those data into
useful financial information for the policymakers. It is a network established in an
organization to provide directors with information that assist them in decision making
(Salehi et al., 2010).

1
One of the determinant factors of successful firms is knowledge management as it
contributes firms in setting up long-term external environments. In the initial part of the
21st century, the businesses initiated focusing on knowledge management and as a
consequence, it transformed into a well-sought topic, particularly in the field of managerial
accounting research. It was evidenced by prior studies that enterprises that had control of
their knowledge and those that integrate such knowledge into their business actions are
more likely to achieve superior success (Dayan, 2017).

Accounting information system is a collection of data and processing procedures that

generates the required information of the user. The basic purpose of using accounting
information system is to generate necessary accounting information to external individuals
and groups like management and operational personnel (Hall, 2012).

The level of knowledge management supports an accounting information system employs

for formulation and execution of strategic management determines the correctness and
dependability of its performance. This contributes to the advancement of the business
system and its objectives, demonstrating the contribution of knowledge management to
business operations. Information management in businesses enables them to create long-
term competitive advantages that result in profitable operations in the constantly shifting
market environment. The ability of a company to assist its employees in cooperating in the
generation, capture, sharing, and leveraging of collective knowledge for greater
performance is referred to as knowledge management (Lakshman, 2007).

Chenhall (2003) reported that different AIS designs hold different organizational strategic
trajectories, enhancing overall organizational performance (OP). AIS's increased resource
allocation strengthens and streamlines the organizational culture, enabling the business to
adapt to changing market conditions (Al-Najjar, 2017).

An organization's financial data is used by AIS, a system that tracks internal and external
publishable data, financial reports, and trend analysis to forecast an organization's
performance. It combines several accounting processes and tools with a variety of
approaches (Grande et al., 2011).

Ismail (2009) reveals that the AIS has a significant role in the growth of firm performance.
Such performance is feasible and maintainable provided that the businesses are proactive
2
in responding to environmental changes, particularly the information technology
revolution. This report makes the case that AIS offers higher competitiveness, stronger
corporate record-keeping oversight, and an improved understanding of changing business
contexts.

In Nepal, previous studies have portrayed the scenario of AIS practices on SMEs but no
studies have found the impact of accounting information systems on organization
performance. So, this study seeks to explore the potential impact of accounting information
system on organizational performance of SMEs located in Damauli.

Purpose of the Study

The general purpose of the study is to investigate the impact of accounting information
system on organizational performance of SMEs. More specifically this study focus on
following purpose:

i. To examine the impact of accounting knowledge on organizational performance of

SMEs.
ii. To examine the impact of management support on organizational performance of
SMEs.
iii. To examine the impact of recording keeping performance on organizational
performance of SMEs.

Hypothesis Formulation

Research hypothesis is an unproven statement, which assist the researcher to draw the
suggestion on the hypothetical assumption whether it is true or false based on some
specific statistical tests. A statistical hypothesis, which is stated for the purpose of possible
acceptance, is called a null hypothesis and is denoted by H0. Any hypothesis, which is
complementary to the null hypothesis (Ho) is called an alternate hypothesis and is denoted
by H1. The following hypotheses have been formulated for this study.

H01: There is no significant impact of accounting knowledge on organizational

performance.

Ha1: There is significant impact of accounting knowledge on organizational performance.

H02: There is no significant impact of management support on organizational performance.

Ha2: There is significant impact of management support on organizational performance.

3
H03: There is no significant impact of record keeping performance on organizational
performance.

Ha3: There is significant impact of record keeping performance on organizational

performance.

Significance of the Study

This study is useful for those organizations that are using a computerized accounting
system but are not aware of the potential impact of use of AIS on the overall organization's
performance. The outcomes of this research has implications for further research regarding
accounting information systems; for instance, the impact of accounting information
systems on the financial and marketing performance of other organization can be
investigated. Similarly, other organizations from different sectors can recognize the
benefits of integrating accounting information systems into their operation. Accounting
information system influences investment and credit decisions, so ensuring efficient and
effective use of AIS is crucial for the benefit of the decision maker.

This study is valuable for SMEs sector. The core approach of accounting information
system is to establish the better accounting knowledge that directly impact on the financial
performances of an organization. Besides, it helps to build positive attitude and perception
that helps to make the organizational success in term of transparent transaction and higher
profitability.

Limitations of the Study

This research is conducted to study the impact of accounting information system on

organizational performance of SMEs in Damauli. The study has been conducted to the
partial fulfillment of the requirement for the Degree of Bachelor of Business
Administration. The limitations of the study are as follow:

i. This study is based on Damauli only and findings of this study may not be
applicable to other region.
ii. This study proceeds to analyze the accounting system of registered small industries
having the fixed capital not more than 10 million.
iii. This study is based on primary data. So, the limitations of primary data may
congenital.

4
Literature Survey

In this section, review of conceptual and previous studies which are relevant to this study
has been presented.

Meaning and Definition of Cottage and Small Industries

Cottage Industry gives us an idea of very small type of manufacturing unit which is
generally handled at household level in which family members work full or part time. It is
said that such type of industries doesn’t need to maintain any accounts because the process
of production of cottage industries is through manual labor using little or no machinery.
Small industries are more or less mini factories. These industries are more dependent on
outside resources i.e. man, material, money, machine and management. They supply semi-
finished products to the large industries or to the consumers.

Historical Development of Cottage & Small Industries

In the ancient period, people fulfilled their needs with the goods produced at home. They
gradually learnt to weave clothes and make other necessary gears. They started to export
their specialized goods to the foreign countries around 14th century. They expanded these
productive activities in large scale. Then large industries were begun to established around
18thcentury. After the industrial revolution of Great Britain in 19th century, the world
entered into the industrialization era but the role of small & cottage industries has not
decrease.

In Nepal, the evolution of crafts and small industries is perhaps as old as the growth of the
“Kiratte civilization”. Nepalese goods were exported to India and Tibet in “Lichchhavi”
and “Malla” period of Nepal. Nepalese handicrafts were praised by Kautilya in 14th
century B.C. The Chinese travelers Heun Tsang also described the Nepalese artisans in 673
B.C. In 1793 Kirk Patriak who came to visit Nepal, also appreciated the Nepalese
handicrafts. The history of united form of cottage industries began with the beginning of
cotton textile hand loom in 1925 A.D. period of P.M. Chandra Shamsher. In 1935 “Udyog
praised” was constituted. Similarly, a governmental office was established in 1939 named
as “Nepal Kapada and Gharelu Illam Prachar Adda” (Nepal cloth and cottage promotion

5
office). After a long gap, in 1947 some personnel were sent to India for cotton industry
training. On 28th April 1954Ford Foundation provided financial as well as technical
assistance to Nepal for the development of cottage and small industries in the country.
Department of cottage and village industry was established in 1957A.D.

The Information Environment

The study of AIS with the recognition that information is a business resource. Like the
other business resources of raw materials, capital, and labor, information is vital to the
survival of the contemporary business organization. Every business day, vast quantities of
information flow to decision makers and other users to meet a variety of internal needs. In
addition, information flows out from the organization to external users, such as customers,
suppliers, and stakeholders who have an interest in the firm. Figure no. 1 presents an
overview of these internal and external information flows.

Figure 1.1

Internal and external flows of information

Top
Management Stakeholders
Performance Information
Budget Information
Middle
And Instructions
Management

Operations
Customers Management Suppliers

Operational Personnel

Day-to Day Operations Information

Source: Hall, (2012)

Figure 1.1 shows the breakdown of business organization divided horizontally into several
levels of activity. The pyramid's base is made up of business operations. They include the
organization's product-focused tasks including manufacturing, sales, and distribution. The
structure is broken up into three management tiers above the base level: operations
management, middle management, and top management. Operations management is
6
directly accountable for controlling day-to-day operations. Middle management is
responsible for the short-term planning and coordination of actions necessary to achieve
organizational objectives. Top level management is responsible for long-term planning and
setting organizational goals. Every employee in the organization, from business operations
to top management, needs information to accomplish their responsibilities.

Notice in figure no. 1 illustrates how information moves both horizontally and vertically
inside the business. The horizontal flow provides extremely specific data on the numerous
business transactions influencing the firm to operations-level duties. This contains details
on activities like the purchase and delivery of items, the utilization of labor and resources
during manufacturing, and internal resource transfers from one department to another.
Instructions, quotas, and budgets are all forms of information that are distributed vertically
from senior management to subordinate managers and operations staff. Also, supervisors at
all levels receive condensed information about operations and other activities. This data is
used by management to assist its different planning and control operations.

A second flow of information depicted in figure no. 1 symbolizes exchanges between the
organization and users in the external environment. Trading partners and stakeholders are
the two categories of external users. Information about consumer sales and billing, supplier
purchases, and inventory receipts are all exchanged with trading partners. External or
internal parties with a direct or indirect interest in the company are referred to as
stakeholders. Financial statements, tax returns, and stock transaction data are all shared
with these parties. Internal auditors and accountants are examples of internal stakeholders.

Meaning of Accounting

Accounting is the systematic process of recording, classifying, summarizing, interpreting,

and communicating financial transactions and information of organization or business. The
primary purpose of accounting is to provide useful financial information to stakeholders,
such as investors, creditors, management, and regulators, about the organization's financial
health and performance. Accounting also includes the preparation of financial statements,
such as the balance sheet, income statement, and cash flow statement, which provide an
overview of the organization's financial activities over a specific period. Additionally,
accounting involves compliance with financial reporting standards and regulations, such as
Generally Accepted Accounting Principles (GAAP) in the United States or International
Financial Reporting Standards (IFRS) in other parts of the world.
7
System of Accounting

There are two system of accounting in use. They are:

i. Single entry system

ii. Double entry system

Single Entry System

Under the single entry system of book keeping only one aspect of every transaction is
recorded in the book of account. This system is usually adopted by firms having few
transaction and professional man.

Single entry system of book keeping is not any specific system of accounting. Single entry
cannot be termed as system as it is not based on any scientific system like double entry
system. It is incomplete and disjointed form of accounting system. Single entry system is a
system of book keeping in which only records of cash and personal accounts are
maintained. The degree of incompleteness of record varies from business to business
according its nature and complexity.

Single Entry Bookkeeping Practices in SMEs

Many small business, however not always use the complete bookkeeping cycle and use a
single entry book keeping system instead of the double entry system of journals and
ledgers. They don’t record the income until the actual cash payout. Although single entry
system record timely but its records may be inaccurate and do not contain the necessary
information’s to prepare balance sheet. Generally, single entry system uses a daily and
monthly summary book.

Daily Summary Book

The daily summary book takes the place of cash receipts and cash payments journals.
Daily cash report provides information of cash for the summary book.

Monthly Summary Book

The total for the month are transferred from the daily summary book to monthly summary
book. Notice that in the monthly summary book it is not necessary to provide a cheque
number column. At the end of the year, information is available as to the total amount paid

8
out for each cost expenses items as well as the total amount received from sales, if any
return on purchase or sales, it is shown in the bracket in the particulars columns.

Double Entry System

Lucas Pacioli (1494) described a method of arranging accounts in such a way that the dual
aspect would be expressed by a debit amount and equal credit amount. This concept in
modern accounting is called double entry system. Every transaction resulting in transfer of
money goods or service must imply existence of at least two parties. The set of records
based on this duality is known as double entry system of book keeping.

The Accounting Information System

AIS subsystems process both financial transactions and nonfinancial transactions that
directly affect the processing of financial transactions. For instance, the AIS processes
changes to customers’ names and addresses in order to keep the customer file up to date.
Although not technically financial transactions, these changes provide vital information for
processing future sales to the customer.

Subsystem of Accounting Information System

The accounting information system is composed of three core subsystems: transaction

processing system, general ledger/financial reporting system (GL/FRS) and management
reporting system.

Figure 1.2

Information System Chart

Information System

Accounting Information Management

System Information System

Transaction Processing General Management Reporting

System Ledger/Financial System
Reporting System

Source: Hall, (2012)

9
Transaction Processing System

The TPS is crucial to the overall function of the information system by converting
economic events into financial transactions, recording financial transactions in the
accounting records (journals and ledgers), and distributing crucial financial information to
operations staff to support their daily operations. The TPS handles daily business
operations and provides users across the organization with a large number of reports,
documents, and messages. The TPS consists of three transaction cycles: the revenue cycle,
the expenditure cycle, and the conversion cycle. Each cycle captures and processes
different types of financial transactions.

General Ledger/Financial Reporting Systems

The financial reporting system and the general ledger system are two interconnected
subsystems. They are, however, typically seen as a single integrated system due to their
operational interdependency. It generates the standard financial reports required by law,
including the income statement, balance sheet, statement of cash flows, and tax returns.
The GLS processes summaries of transaction cycle activity to update the general ledger
control accounts. The financial resource status and changes are measured and reported by
the FRS. The FRS mainly disseminates this information to users outside the organization,
because the organization has little to no discretion over the information it provides, this
type of reporting is referred to as nondiscretionary. Most of this data is in the form of
conventional financial statements, tax returns, and other legal documents.

Management Reporting System

The MRS provides the internal financial data required for business management. It offers
special purpose financial reports to internal management as well as data for making
decisions, such as budgets, variance reports, and responsibility reports. Many daily
company issues must be resolved right away, and managers must also plan and oversee
their operations. Several types of information are needed by managers for the various
decisions. Budgets, variance reports, cost-volume-profit studies, and reports based on
current cost data are examples of typical reports generated by the MRS. This style of
reporting is known as discretionary reporting because the business can decide what
information to report and how to present it.

10
A General Model for Accounting Information System

Figure 1.3 presents a general model for viewing AIS applications. This is a general model
because it describes all information systems, regardless of their technological architecture.
The elements of the general model are end users, data sources, data collection, data
processing, database management, information generation, and feedback.

Figure 1.3

General Model for AIS

The External Environment

The Information
Database
System Management

External
Source of Data Data Information External
Data Collection Processing Generation End user

Feedback
Internal Internal
Source of End user
Data
The Business Organization

Feedback

Source: Hall, (2012)

End Users

End users can be divided into two categories: internal and external. Creditors,
stockholders, potential investors, regulatory bodies, tax authorities, suppliers, and clients
are examples of external users. Institutional users such as banks, the SEC, and the Internal
Revenue Service (IRS) receive information in the form of financial statements, tax returns,
and other reports that the firm has a legal obligation to produce. Trading partners

11
(customers and suppliers) receive transaction-oriented information, including purchase
orders, billing statements, and shipping documents. Internal users include management at
every level of the organization as well as operations personnel. The company has a lot of
flexibility in how it responds to the needs of internal users, as opposed to outward
reporting. Accounting professionals who develop systems must strike a balance between
the needs of internal users and legal and financial considerations like sufficient control and
security, appropriate accountability, and the expense of supplying alternate forms of
information.

Data Sources

The information system's first operational phase is data collection. It is important to make
sure that any event data entering the system is accurate, complete, and free of significant
errors. The information system ought to gather pertinent information. Multiple users may
then have access to these data. Redundant and inconsistent data are produced when the
same information is captured more than once. The capacity of information systems to
collect, process, and store data is constrained. Unsuitable actions and poor decisions may
be the result of inconsistent redundant data elements.

Data Collection

Data collection is the first operational stage in the information system. The objective is to
ensure that event data entering the system are valid, complete, and free from material
errors. The information system should capture relevant data. These data can then be made
available to multiple users. Capturing the same data more than once leads to data
redundancy and inconsistency. Information systems have limited collection, processing,
and data storage capacity. Inconsistency among redundant data elements can result in
inappropriate actions and bad decisions.

Data Processing

Once data collected, data usually require processing to produce information. Tasks in the
data processing stage involve from simple to complex. Examples include mathematical
algorithms (such as linear programming models) used for production scheduling
applications, statistical techniques for sales forecasting, and posting and summarizing
procedures used for accounting applications.

12
Database Management

The organization’s database is its physical repository for financial and non-financial data.
The term "database" might be a computer disk or a filing cabinet. It can represent the
contents of the database in a logical hierarchy regardless of the database's physical
structure.

Information Generation

Information generation is a critical aspect of an accounting information system (AIS). The

information generated by an AIS is used by stakeholders, such as management, investors,
creditors, and regulators, to make informed decisions about the organization's financial
health and performance. An AIS can generate financial statements such as the balance
sheet, income statement, and cash flow statement that provide an overview of the
organization's financial activities over a specific period. AIS can generate budgets and
forecasts that provide estimates of future financial performance and help organizations
plan and manage their resources more effectively.

Feedback

Feedback is an essential component of an accounting information system (AIS) as it

enables organizations to evaluate the effectiveness and efficiency of the system and make
improvements where necessary.

Objectives of Accounting Information System

Each organization’s information system must be customized to meets the needs of its users.
Therefore, specific objectives of information system may vary between firm. But the
fundamental objectives are common to all business. They are:

i. To assist management's stewardship function. Stewardship is the term used to

describe management's obligation to effectively manage the firm's resources.
ii. To support management decision making. The information system supplies
managers with the information they need to carry out their decision-making
responsibilities.

13
 iii. To support the firm’s day-to-day operations. The information system provides
information to operations personnel to assist them in the efficient and effective
discharge to their daily tasks.

Significance of AIS in SMEs

Accounting information system is a computerized accounting program that is designed for

the collection and presentation of accounting related information so accountants and
executives can make informed decisions. It is considered a pivotal section of finance
offices. The data is entered into the system are tracked and categorizes in accounting data.
All business transactions are entered into the program by an accounting clerk, and the
transactions are automatically posted to the corresponding accounts. Many systems are
designed to pay all outstanding bills with the click of a button. A date is chosen, and
checks for all bills due are automatically generated. This type of system also makes billing
easier. The system stores information, and a clerk decides when to print bills. Depending
on the business, this is done daily, weekly, or monthly. For the clerk, the system generates
all bills quickly and easily. For an accountant, year-end closing is frequently a laborious
process. A post-closing trial balance is produced after an unadjusted trial balance has been
created, adjusting entries have been made and recorded, an adjusted trial balance has been
computed, closing entries have been made, and so forth. All financial reports are generated
by an accounting information system.

Manual calculations have a higher risk of errors because accuracy depend on the
accountant’s precision. However, the process of calculation can be automated using an
accounting information system. Accounting information system makes it easy for
stakeholders to monitor the company’s financial position more comprehensively.
Accounting information software detect errors as well as track financial data in real-time.
Management can keep track of expenses and across different business units and
departments. Company does not need additional accountants to perform bookkeeping,
correcting data and other tasks so it saves company’s costs for other important needs.
Stakeholders will be able to make better business decisions with complete, accurate, and
timely reports.

Review of Previous Studies

14
M. O et al. (2020) have conducted a research entitled, “Effects of Accounting Information
System on Organization Performance in Nigeria” with an objective to examines accounting
information system on performance of corporate organizations in Nigeria. This study
explores the role of professionals in accounting, information technology and academics.
This study prepares 30 questionnaires with the use of Likert scale and 25 retrieved which
was analyzed and the single factor ANOVA technique was used to test the hypothesis.
Professionals in accounting, academics and information technology constitute the
population of study in Lagos State. The research conclude that accounting information
systems will significantly improve the performance of corporate organizations in Nigeria.

Khalid and Kot (2021) has conducted a research entitled “Factors Affecting the Quality of
Accounting Information: The Role of Accounting Information Systems” with an objective
to investigate the impact of accounting information systems on performance management
in Thailand’s banking sector. Purposive sampling was used in the study's content analysis
of the financial statements from 2011 to 2019 from six of Thailand's largest commercial
banks. Multiple regressions and correlations were used to test the study hypotheses. The
study comes to the conclusion that Return on Equity is positively and significantly
influenced by Total Assets, Operating Assets, and Earnings after Tax. Overall, the study
concluded that AIS has a significant and advantageous impact on performance
management, and it made the recommendation that AIS be taken into account as a crucial
factor if long-term improvement in performance management is an organization's business
objective.

Lutfi (2021) has conducted a research entitled “Understanding the intention to adopt cloud-
based accounting information system in Jordanian SMEs” with an aim to identify the
factors influencing the IACB-AIS of SMEs in Jordan. This study examined CB-AIS
adoption among SMEs in Jordan using the Technology, Organization, and Environment
model. A structured survey questionnaire was used to collect data from 156 Jordanian
SME owners and managers who were contacted online. The proposed hypotheses were
supported by the findings, which showed that the factors have a positive and significant
impact on the IACB-AIS of SMEs in Jordan. The study's findings are anticipated to assist
decision-makers and practitioners in the IT industry by examining a real-world IACB-AIS
case and emphasizing the value of its application.

15
Al-Matari et al. (2022) have conducted a research entitled, “The Impact of Dynamic
Accounting Information System on Organizational Resilience: The mediating role of
Business Processes Capabilities” with an objective to depict the role of business process
capabilities in modulating the link between dynamic AIS capability and organizational
resilience. The impact of dynamic AIS on organizational resilience was investigated using
a quantitative method. This study selected large companies in Malaysia as a study sample
due to the argument that medium-to-large organizations are abler to provide AIS and more
likely to have resources to ensure the organization’s resilience. The targeted respondents of
this study are chief executive officer, chief finance officer, director of information, director
of IMIS, senior system analysts, director of database administration, IT managers, and
senior accountants. The selection was based on the assumption that these individuals are
generally involved in resource repurposing and innovation in the organization. The study
results that IT resources alone will not have an influence on information or result in a
positive improvement in performance unless IT is integrated into the business processes’
roles. Organizations with improved business processes capabilities can easily anticipate
market demands, identify external competitors, establish long-term relationships with
external stakeholders, and respond quickly to market changes. It also helps organizations
sustain competitiveness and use their valuable strengths to identify threats and exploit
market opportunities.

Yanti and Pratiwi (2022) has conducted a research entitled “The impact of accounting
information systems on performance management in the Banking Sector” with an objective
to determining the effects of organizational structure, organizational culture and user
abilities on the quality of accounting information systems. The population of this study are
the employees in the Jakarta and Tangerang areas who worked in the accounting and
finance fields with samples obtained were 97 respondents. The primary data used in this
study were obtained through the distribution of questionnaires, which were analyzed by
using Partial Least Squares (PLS). The results suggested that the quality of accounting
information systems was unaffected by the organizational structure, Meanwhile,
organizational culture and user abilities had a significant effect. In addition, accounting
information system quality had significant effect on accounting information quality.

Hamad and Qader (2023) have conducted a research entitled “The Effect of Accounting
Information System on Organizational Effectiveness: Kurdistan Region is a Case of the

16
Study” with an objective to examine how automotive manufacturers use and utilize
accounting systems and their effects on organizational efficiency. This study uses
descriptive, correlation, and regression analysis research method. Furthermore, qualitative
methodologies are used in data gathering and analysis. This research disclose that
accounting information systems are a significant tool for successful management, decision-
making, and control activities of organization.

Research Methods

The objective of this investigation is to learn the role of AIS on organizational

performance. The study is descriptive in nature. The questionnaire is prepared by
considering Likert’s 5 points scale with a choice of strongly agree to strongly disagree. A
descriptive evaluation has been adopted to explain the characteristics of the respondents.
Pearson’s correlation coefficient technique is used to reveal the relationships between the
independent and dependent variables and for testing the validity of hypotheses, linear
regression analysis has been used.

Research Design

The research design is the conceptual structure and strategy of investigation conceived to
define a research problem. It is the plan of a proposed study to specify the appropriate
research methods and procedures for obtaining specific findings with validity, objectivity,
and accuracy as possible. Actually, research design presents a series of guideposts to
enables the researcher to process in the right direction in order to achieve the goal. The
research design followed in this study is descriptive and analytical research design.

Population and Sample

Population refers to all items that have been chosen for study, to any collection of specified
group of objects or industries. The total number of registered small and cottage industries
in Damauli are considered as the population of this study. Total 300 small scale industries
are registered in Damauli till end of the 2079 B.S. The sample included the top, middle
level managers and subordinate working at different SMEs located in the Damauli.
Stratified sampling technique has been used to represent the population.

17
Calculation of sample size

n
(n)= 2
Sample size z ∗p (1− p)
1+ 2
D N

Where,

Z-score value for desired confidence level (Z) = 1.96

Population size (N) = 300

Population proportion (P) = 0.5

Margin of error (D) = 5%

Confidence level = 95%

Sample size (n) = 169

Source of Data

Primary data have been collected for this research as the secondary data are not suitable to
measure in this case. A detailed survey questionnaire has been prepared and used to take
the interview of each participant. The respondents have been chosen using convenience
sampling method. The survey questionnaire included a total 21 elements (15 for
independent variables and 6 for dependent variable) in table 1.1. A five point Likert scale
has been used to rank the responses from “Extremely disagree” (1) to “Extremely agree”
(5).

Table 1.1

Number of questions under each’s variables in survey questionnaire

Variables No of question

Accounting Knowledge 5

Management Support 5

Record Keeping Performance 5

Organizational Performance 6

Total 21
18
Source: Field Survey, (2023)

Table 1.1 indicates a breakdown of the variables and the numbers of questions in each of
them. In this study, a total 21 number of questions are prepared. Accounting knowledge,
management support and record keeping performance variables include 5 question each.
Similarly, organizational performance variable consists 6 questions.

Data Processing Techniques

Simple linear regression and multi variate regression are used to analyze the results
through statistical package for the social science (SPSS) 25_version. In this study,
hypothesis test (F-test), regression model and Pearson correlation are used for analyzing
the data.

Conceptual Framework

This research is concern to analyze the performance of the organization with the
implementation of accounting information system.

Figure 1.4

Conceptual Framework of the Study

Independent Variables Dependent Variable

Source: Hosian, (2019)

Definition of Variables

Accounting knowledge, management support and record keeping performance are

independent variables and organizational performance is dependent variable which are
briefly defined as follows.

19
Accounting Knowledge

Accounting knowledge includes understanding various accounting concepts and principles,

such as double-entry bookkeeping, accrual accounting, and financial statement analysis.
This knowledge also includes familiarity with accounting software and tools, as well as an
understanding of tax regulations and financial reporting standards. Accounting knowledge
of the employees regarding AIS, consists of the awareness of computer usage, keeping
records, internet usage, receiving & sending e-mail, managing databases, spreadsheet and
word processing (Ismail, 2009).

Management Support

Thomas and Kleiner (1995) Management support is a fundamental issue in the successful
execution of AIS in SMEs, thus increasing operational performance and profit. Managers,
particularly top and mid-level managers have a dominant role in connecting the IT with
firm’s strategies and objectives. Management support would also bring about an optimistic
outlook regarding the utilization of AIS in the organization which most likely results in the
successful execution AIS in SMEs. Igbaria et al. (1996) describe MS as the contribution
and participation of top-level manages or executives of the company in the information
related activities. It can also be regarded as the contribution of managers in formulating
and implementing the IS strategies for any organization.

Record Keeping performance

Taking the help of proper financial reports derived from a good record keeping system,
performance of one period (month, quarter or year) with another one can be compared. A
precise record of the enterprise’s financial performance is a tool to check performance in a
particular area and definite time period. Accounting records offer a preliminary position
for absolute and precise income tax calculation, a foundation for resonance preparation for
the future and a root for conversation with associates, possible investors and loan providers
(Nyathi et al., 2018).

Organizational performance

Organizational performance refers to the overall effectiveness and efficiency of an

organization in achieving its goals and objectives. It is a measure of how well an
organization utilizes its resources to produce goods or services and to meet the needs of its
stakeholders. Performance can be measured in different ways, such as financial
20
performance, customer satisfaction, employee satisfaction, and innovation. Financial
performance is often used as the primary measure of organizational performance, as it
provides a clear indication of the organization's profitability, liquidity, and solvency.
However, non-financial measures are also important, as they can provide insights into
other aspects of organizational performance, such as its ability to attract and retain talent,
its ability to innovate and adapt to changing market conditions, and its impact on the
environment and society.

The Model

The theoretical framework has been stated as following functions

OP = F {AK, MS, RKP}

Where,

OP = Organizational Performance

F = Function

AK = Accounting Knowledge

MS = Management Support

RKP = Record Keeping Performance

The following regression equation is formulated based on theoretical framework of this

study for analysis of data.

Y= b0+ b1X1 + b2X2 + b3X3 + ε

Where,

Y = Dependent Variable (Organizational Performance)

b0 = Constant

21
X1, = Accounting Knowledge

X2= Management Support Knowledge

X3= Record Keeping Performance

ε = Error term

22
 CHAPTER II: DATA PRESENTATION AND ANALYSIS

Organization Profile

The study included four different types of organizations: hardware, departmental store,
medical stores and restaurants. These organizations are chosen because they represent
different industries and provide varying products and services to their customers.

Hardware stores are included in the study as they provide a variety of tools and materials
for different purposes. Departmental stores are included in the study due to their
importance in providing food. Medical stores are chosen due to their importance in
providing essential medical supplies and medication to the general public. Restaurants are
selected as they provide a service that is consumed by a wide range of people.

Overall, the study included a diverse sample of organizations that cater to different needs
of the customers. By including a variety of organizations, the study aims to provide a
comprehensive understanding of the impact of accounting information system on
organizational performance. All organizations included in the study are located in the same
city. The names of the organizations have been kept anonymous for confidentiality
purposes.

Respondents’ Personal Information

Respondent information refers to the data and details collected from individuals or entities
who participate in a survey or research study. Respondents are chosen based on sample
related to the research question. In this study respondent information include demographic
information such as gender, age, education level, and business sector. Other information
collected from respondents include their opinions, preferences, and experiences related to
the research topic. It is important to gather demographic information about the participants
to ensure that the sample is representative and to analyze how different groups may
respond differently to the variables being studied. However, it is also important to protect
the privacy and confidentiality of the participants.

23
Table 1

Demographic details of respondents

Demographic Variable Category Frequency Percentage

Gender Male 84 49.7%

Female 85 50.3%

Other 0 0%

Age 20-29 82 48.5%

30-39 71 42.0%

40+ 16 9.5%

Education level Undergraduate 66 39.1%

Graduate 103 60.9%

PhD 0 0.0%

Business Sector Hardware 41 24.3%

Departmental Store 31 18.3%

Medical Store 75 44.4%

Restaurant 22 13.0%

Source: Field survey, (2023)

Table 2.1 represents the frequency and percentage of participants based on their
demographic variables. Under Gender, there are 84 male participants and 85 female
participants which accounts for 49.7 percentage and 50.3 percentage of the total
participants respectively. There are no participants in the "Other" category. Similarly,
under Age, there are 82 participants in the age range of 20-29, 71 participants in the age

24
range of 30-39 and 16 participants in the age range of 40+ which accounts for 48.5
percentage, 42.0 percentage and 9.5 percentage of the total participants. Under Education
level, there are 66 participants with an Undergraduate degree, which accounts for 39.1
percentage of the total participants. There are 103 participants with a Graduate degree,
which accounts for 60.9 percentage of the total participants. There are no participants with
PhD. Under Business Sector, there are 41 participants in the Hardware sector, 31
participants in the Departmental Store sector, 75 participants in the Medical Store sector,
22 participants in the Restaurant sector which accounts for 24.3 percentage, 18.3
percentage, 44.4 percentage, and 13.0 percentage of the total participants respectively.

Data Presentation

The independent variables of the study are accounting knowledge, management support,
and record keeping performance. Structured 5 Likert scale questionnaire has been prepared
and provided to the respondents. The received responses are presented in this section
report.

Accounting Knowledge

Accounting knowledge is the level of understanding and expertise that an individual

possesses in the field of accounting. In this study, total five questions are provided to the
respondents to opine the scale and the responses are obtained as follows.

25
Table 2.2

Respondents’ response on accounting knowledge

S.N Statement Scale Total

SD D N A SA

1 I have appropriate accounting 0% 4.7% 7.7% 53.3 34.3% 100%

knowledge. %

2 Accounting knowledge is 0.6% 0.6% 19.5% 34.9 44.4% 100%

essential for proper record of %
transactions and processing.

3 My organization offers 0% 2.4% 8.9% 53.3 35.5% 100%

training to impart up-to-date %
accounting knowledge.

4 Accounting knowledge is a 0% 0.6% 7.7% 53.3 38.5% 100%

significant component to %
implement AIS.

5 I believe that accounting 0.6% 0.6% 19.5% 30.2 49.1% 100%

knowledge can enhance %
organizational performance.

Source: Field survey, (2023)

Table 2.2 presents the results of a survey related to accounting knowledge. 53.3 percentage
of respondents rated statement 1 as agree, followed by 34.3 percentage rating it as strongly
agree. For statement 2, 44.4 percentage and 34.9 percentage of respondents rated as
strongly agree and agree respectively. For statement 3, 53.3 percentage, 35.5 percentage
and 8.9 percentage of respondents rated as agree, strongly agree and neutral respectively.
53.3 percentage, 38.5 percentage of respondents rated statement 4 as agree, strongly agree.
26
Management Support

Management support helps to make accountability and transparency. Total five questions
are provided to the respondents to opine and the responses are obtained as follows.

Table 2.3

Respondents’ response on management support

S.N Statement Scale Total

SD D N A SA

1 Management support is a pre- 0% 2.4% 9.5% 75.1 13% 100%

condition to implement AIS. %

2 As a manager, I always support 0% 4.1% 24.3% 57.4 14.2% 100%

to implement appropriate AIS in %
my enterprise.

3 I believe that accounting 0% 2.4% 8.3% 72.8 16.6% 100%

information need to be updated %
and recorded chronicled.

4 As a manager, I am eager to 0% 4.1% 22.5% 54.4 18.9% 100%

invest and operate a suitable %
AIS in my enterprise.

5 As a manager, I believe that a 0% 4.1% 22.5% 55.6 17.8% 100%

proper and effective accounting %
system can reduce inefficiency
and increase performance.

Source: Field survey, (2023)

27
Table 2.3 presents respondent’s response on management support in organization. The
majority of respondents rated each statement as agree. 75.1 percentage, 57.4 percentage,
72.8 percentage, 54.4 percentage and 55.6 percentage of respondent rated as agree for
statement 1, 2, 3, 4 and 5 respectively. There is minimal response to disagree statements as
the response are 2.4 percentage, 4.1 percentage, 2.4 percentage, 4.1 percentage, and 4.1
percentage for statement 1- 5 respectively. None of the respondent have opine to strongly
disagree.

Record Keeping Performance

A complete and efficient record keeping performance helps it promising for enterprises to
expand precise and suitable financial reports that depict the development and existing state
of the organization. Total five questions are asked to respondents to provide their opinion
and the responses are presented as follows:

Table 2.4

Respondents’ response on record keeping performance

S.N Statement Scale Total

SD D N A SA

1 It is imperative to keep 3.6% 3.0% 35.5% 33.1% 24.9% 100%

accounting record appropriate
and chronological.

2 AIS is worthy platform to keep 0.6% 3.0% 27.2% 32.5% 36.7% 100%
proper accounting track records.

3 Maintaining accurate records can 0% 0% 7.7% 71.6% 20.7% 100%

increase efficiency and reduce
cost.

4 I always encourage my staffs 1.8% 3.0% 27.2% 33.7% 34.3% 100%

to keep proper transaction records
systematically and scientifically.

5 Accounting records must be cross 0% 2.4% 8.9% 68.0% 20.7% 100%

28
 checked and validated.

Source: Field survey, (2023)

Table 2.4 depicts the responses of respondents regarding record keeping performance.
Statement 1 received relatively low percentages of strongly disagree (3.6%) and disagree
(3.0%) responses, indicating that the majority of managers agreed (35.5%) followed by
neutral (33.1%) and strongly agreed (24.9%) with the statement. Statement 2 received
higher percentages of strongly agree responses (36.7%) compared to other response
options, indicating that a significant proportion of managers strongly agreed with the
statement. The percentages of strongly disagree (0.6%) and disagree (3.0%) responses are
relatively low, indicating that the majority of managers either agreed (32.5%) or are neutral
(27.2%) about the statement. Statement 3 received a high percentage of agree responses
(71.6%), indicating that a significant proportion of managers agreed with the statement.
None of the respondents strongly disagreed or disagreed with the statement. Statement 4
received a relatively high percentage of strongly agree responses (34.3%), indicating that a
significant proportion of managers strongly agreed with the statement. The percentages of
strongly disagree (1.8%) and disagree (3.0%) responses are relatively low, indicating that
the majority of managers either agreed (33.7%) or are neural (27.2%) about the statement.
Statement 5 received a relatively high percentage of agree responses (68.0%), indicating
that a significant proportion of managers agreed with the statement. 2.4 percentages of
respondent disagree and none of the respondents strongly disagreed with the statement.

Organizational Performance

Organizational performance refers to how well an organization is achieving its goals and
objectives. To improve organizational performance, it requires a systematic approach that
involves setting clear objectives, measuring performance, analyzing results, and
implementing improvement strategies. Organizational performance is influenced by a
variety of factors, including the organization's strategy, structure, culture, leadership,
human resources, technology, and external environment. This study focus on technological
factor to calculate the performance of the organization. In this study, total six questions are
asked to the respondents to provide their opinion and the responses are presented as follow:

29
Table 2.5

Respondents’ response on organizational performance

S.N Statement Scale Total

SD D N A SA

1 Organizational performance is 0% 5.9% 5.3% 70.4 18.3% 100%

a mutual contribution from all %
employees.

2 AIS can contribute a lot in 0.6 1.8% 30.2% 45.0 22.5% 100%
achieving organizational % %
performance.

3 There is a positive relationship 0% 4.1% 20.7% 49.7 25.4% 100%

between AIS implementation %
and organizational performance.

4 Accounting department is an 0% 1.8% 25.4% 40.8 32.0% 100%

essential department for my %
organization.

5 Accounting records are needed 0% 4.1% 19.5% 43.8 32.5% 100%

to updated and integrated %
scientifically.

6 The conventional accounting 0% 1.2% 29.6% 40.8 28.4% 100%

system should be modernized %
with information technology.

Source: Field survey, (2023)

30
Table 2.5 presents the respondents' opinions on the importance of AIS implementation for
organizational performance. For statement 1, 70.4 percentage of respondents rated as agree
followed by 18.3 percentage rating it as strongly agree. Similarly, 45 percentage of
respondent agree with statement 2, while 1.8 percentage of respondent disagrees following
with 0.6 percentage strongly disagree. For statement 3, 49.7 percentage, 25.4 percentage
and 20.7 percentage of respondents rated as agree, strongly agree and neutral respectively.
40.8 percentage, 32.0 percentage of respondents rated statement 4 as agree and strongly
agree respectively. 43.8 percentage of respondent agree statement 5 with no strongly
disagree. Finally, statement 6 proposes that the conventional accounting system should be
modernized with information technology. The majority of respondents (40.8%) agree with
this statement following (29.6%) neutral, (28.4%) strongly agree and (1.2%) disagrees with
0 percentage strongly disagree.

Data Analysis

Data analysis is the process of examining and interpreting data to extract useful insights
and inform decision-making. SPSS_25 version tool has been used to analyze the collected
data and the following multivariate regression equation has been derived.

Regression equation: OP = 0.0356 + 0.6597*AK + 0.2232*MS + 0.0699*RKP + 0.33141

31
Table 2.6

Pearson Correlations Matrix

Correlations

AK MS RKP OP

AK Pearson Correlation 1 .215** .154* .780**

Sig. (2-tailed) .005 .045 .000

N 169 169 169 169

MS Pearson Correlation .215** 1 .081 . 350**

Sig. (2-tailed) .005 .293 .000

N 169 169 169 169

RKP Pearson Correlation .154* .081 1 .201**

Sig. (2-tailed) .045 .093 .009

N 169 169 169 169

OP Pearson Correlation .780** . 350** .201** 1

Sig. (2-tailed) .000 .000 .009

N 169 169 169 169

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Source: SPSS output

32
Table 2.6 illustrates the relationships between the independent variables and the dependent
variable. There is a significant positive correlation between accounting knowledge (AK)
and organizational performance (OP) (r = 0.780**, p < 0.01), providing support for the
alternative hypothesis (Ha1) that there is a significant impact of accounting knowledge on
organizational performance.

Similarly, there is a significant positive correlation between management support (MS) and
organizational performance (OP) (r = 0.350**, p < 0.01), supporting the alternative
hypothesis (Ha2) that there is a significant impact of management support on
organizational performance.

Similarly, there is a significant positive correlation between record keeping performance

(RKP) and organizational performance (OP) (r = 0.201**, p < 0.01), supporting the
alternative hypothesis (Ha3) that there is a significant impact of record keeping
performance on organizational performance.

Table 2.7

Model Summary

Model Summary

Model R R Square Adjusted R Std. Error of

Square the Estimate

1 .805a .649 .642 .33141

a. Predictors: (Constant), RKP, AK, MS

Source: SPSS output

Table 2.7 shows the results of the multiple regression analysis. It displays the correlation
coefficients between the dependent variable and the independent variables, as well as the
coefficient of determination (R-squared) which tells us how well the independent variables
explain the variation in the dependent variable. In this table, the correlation coefficient
between the dependent variable (OP) and the independent variables (AK, MS, and RKP) is
0.805, indicating a strong positive relationship between them. The R-squared value is
0.649, indicating that 64.9% of the variation in OP has been explained by the independent
variables.
33
Table 2.8

Anova Table

Anovaa

Model Sum of df Mean F Sig.

Squares Square

1 Regression 33.457 3 11.152 101.542 .000b

Residual 18.122 165 .110

Total 51.580 168

a. Dependent Variable: OP

b. Predictors: (Constant), RKP, AK, MS

Source: SPSS output

Table 2.8 shows the results of the analysis of variance. It provides information on the
significance of the regression model and its components. In this table, the regression model
is significant, with an F-value of 101.542 and a p-value of 0.000 (less than 0.01). This
indicates that the independent variables (AK, MS, and RKP) significantly predict the
dependent variable (OP).

34
Table 2.9

Multi Regression Coefficients

Coefficientsa

Model Standardized Coefficients Standardized t Sig.

Coefficients
Beta Std. Error

1 (Constant) .037 .290 .128 .898

AK .661 .043 .729 15.266 .000

MS .222 .056 .187 3.958 .000

RKP .069 .044 .073 1.563 .120

a. Dependent Variable: OP

Source: SPSS output

Table 2.9 presents the standardized coefficients for a linear regression model that includes
three independent variables (AK, MS, and RKP) and one dependent variable (OP).
Standardized coefficients allow to compare the relative strength of the effects of each
independent variable on the dependent variable.

Based on the results in the table, AK has the strongest effect on the dependent variable,
with a standardized coefficient of 0.729. This means that a one-standard-deviation increase
in AK is associated with a 0.729 standard-deviation increase in the dependent variable. MS
also has a significant effect on the dependent variable, with a standardized coefficient of
0.187. On the other hand, RKP does not have a statistically significant effect on the
dependent variable, as indicated by its high p-value (0.120).

35
Table 2.10

Hypothesis Testing

Hypothesis Calculated Table value Accepted /

F value Rejected

H01: There is no significant impact of 259.767 6.78909456 H01 rejected

accounting knowledge on organizational Ha1 accepted
performance.

Ha1: There is significant impact of accounting

knowledge on organizational performance.

H02: There is no significant impact of 23.322 6.78909456 H02 rejected

management support on organizational Ha2 accepted
performance.

Ha2: There is significant impact of management

support on organizational performance.

H03: There is no significant impact of record 7.007 6.78909456 H03 rejected

keeping performance on organizational Ha3 accepted
performance.

Ha3: There is significant impact of record

keeping performance on organizational
performance.

Source: SPSS output

Table 2.10 show hypothesis testing. In the first section, the calculated f value (259.767) is
greater than the table value (6.78909456). So the alternative hypothesis is accepted
rejecting the null hypothesis indicating there is significant impact of accounting knowledge

36
on organizational performance. In the second section, the calculated f value (23.322) is
greater than the table value (6.78909456). So the alternative hypothesis is accepted
rejecting the null hypothesis indicating there is significant impact of management support
on organizational performance. In the third section, the calculated f value (7.007) is greater
than the table value (6.78909456). So the alternative hypothesis is accepted rejecting the
null hypothesis indicating there is significant impact of record keeping performance on
organizational performance.

Findings and Discussion

The major findings of the study are as follows:

i. Accounting knowledge has a significant positive correlation with organizational

performance, supporting alternative hypothesis and rejecting the null hypothesis.

ii. Management support has a significant positive correlation with organizational

performance, supporting Ha2 and rejecting H02.

iii. Record keeping performance has a significant positive correlation with

organizational performance, supporting Ha3 and rejecting H03.

iv. The p value less than 1% of all three independent variables have a statistically
significant for this study at 99% confidence level.

v. In multiple regression analysis, the p-value for RKP is not significant at a 95%
confidence level.

Overall, these findings suggest that accounting knowledge, management support and
record keeping performance are important factors that influence organizational
performance. On the other hand, using a multiple regression analysis, record keeping
performance seems to have weak correlation and less impact on organizational
performance.

Discussion

The findings of this study have important implications for organizations and their leaders.
They suggest that investing in employee development and ensuring supportive
management can be key factors in driving organizational performance. Organizations that
prioritize these factors may be better positioned to succeed in their respective industries.

37
AK and MS are important factors in determining organizational performance. This is in
line with previous research that has emphasized the importance of knowledge management
in organizations. AK, which represents the level of knowledge and expertise possessed by
employees, may be particularly crucial in enhancing OP. Organizations that invest in
developing and maintaining accounting knowledge among their employees see
improvements in their overall its performance. MS, which reflects the ability of employees
to work together effectively and efficiently, also contribute significantly to OP.
Organizations having supportive management can have a positive impact on the
performance of the organization. This finding highlights the importance of fostering a
collaborative work environment and promoting teamwork. However, there was weak
correlation between record keeping performance and organizational performance.

Correlation and regression are two different statistical analyses, and the results from one
analysis do not always correspond with the results from the other analysis. In this study,
the correlation coefficient between RKP and OP is significant with a value of 0.009. This
indicates that there is a statistically significant linear relationship between RKP and OP.
However, in a multiple regression analysis, the p-value for RKP is not significant at a 95%
confidence level.

The cause for this discrepancy is that the other independent variables (AK and MS) in the
multiple regression model are explaining a large portion of the variation in the dependent
variable, making the contribution of RKP relatively small and non-significant. Another
cause is multi collinearity between RKP and the other independent variables, which affect
the statistical significance of the coefficients in the regression model.

38
 CHAPTER III: CONCLUSION AND ACTION IMPLICATIONS

Conclusion

This study enlightens the impact of accounting information system on the performance of
organization. The results of the study indicate that there is a significant positive correlation
between the three independent variables (AK, MS & RKP) and the dependent variable
(OP). Specifically, the strongest positive correlation has been observed between AK and
OP (r = 0.78, p < 0.001), followed by MS and OP (r = 0.35, p < 0.001), and RKP and OP (r
= 0.20, p = 0.009).

Furthermore, the multiple regression analysis revealed that AK and MS are significant
predictors of OP, with standardized beta coefficients of 0.729 and 0.187, respectively. RKP
is not found to be a significant predictor of OP.

The lack of significant association between RKP and OP is somewhat surprising, given
that previous studies have identified this variable as a key determinant of organizational
performance. The reason behind this discrepancy is that in the multiple regression model
AK and MS are explaining a large portion of the variation in the dependent variable.

Overall, this study provides insights into the factors that can influence organizational
performance and highlights the importance of ongoing employee development and
supportive management for enhancing the organizational performance.

From these research, following conclusions have been drawn.

i. Organizational performance is positively and significantly influenced by the

accounting knowledge in SMEs as accounting knowledge and organizational
performance are positively correlated by +0.78.
ii. Organizational performance is positively and significantly influenced by the
management support in SMEs as accounting knowledge and organizational
performance are positively correlated by +0.35.
iii. Organizational performance is positively and significantly influenced by the
record keeping performance in SMEs as record keeping performance and
organizational performance are positively correlated by +0.201.

39
Action Implications

The reviews and analysis lead to recommend following suggestions for future better
performance of SMEs. The recommendations suggest that organizations should invest in
accounting knowledge and management support to improve organizational performance.
Additionally, organizations should consider a broader range of factors that contribute to
overall performance and conduct further research to deepen our understanding of these
relationship. These recommendations could help organizations improve their overall
performance and achieve their goals. The findings have important implications for
managers and organizations seeking to improve their performance. They suggest that
investing in employee knowledge and promoting teamwork may be effective strategies for
enhancing organizational performance.

i. Organizations should prioritize investment in the development and maintenance of

accounting knowledge among their employees. This could be done by providing
training, workshops, and other professional development opportunities to enhance
the skills of their workforce.
ii. Organizations should update the transaction entry at the same time when it occurs.
iii. Management should provide support to their employees to improve overall
organizational performance. This could include providing resources, feedback, and
recognition for good work. By doing so, organizations can create a positive work
environment that fosters employee engagement, productivity, and loyalty.
iv. Future research could be conducted to examine the relationship between accounting
knowledge and specific aspects of organizational performance, such as financial
performance, productivity, and customer satisfaction.

40
 REFERENCES

Al-Matari, A. S., Amiruddin, R., Aziz, K. A., & Al-Sharafi, M. A. (2022). The impact of
Dynamic Accounting Information System on Organizational Resilience: The
mediating role of Business Processes Capabilities. MDPI, 14(9). Available at:
[Link]

Al-Najjar, M. I. M. (2017). Impact of accounting information system on organizational

performance: A study of SMEs in the UAE. Retrieved from
[Link]
mation_System_on_Organizational_Performance_A_Study_of_SMEs_in_the_UA
E

Bishwokarma, D.B. (2018). Accounting Practice Applied by Small and Medium Scale
enterprises in Nepal. Tribhuvan University Central Library (TUCL): Home,
Tribhuvan University. Available at: [Link]

Chenhall, R. H. (2003). Management control systems design within its organizational

context: Findings from contingency-based research and directions for the future.
Accounting, Organizations and Society, 28(2-3) 127-168. Available at:
[Link]

Dayan, R., Heisig, P., & Matos, F. (2017). Knowledge management as a factor for the
formulation and implementation of organization strategy. Journal of Knowledge
Management, 21(2) 308-329.

Dhungana, B.P. (2009). Accounting Practices Adopted by Small Industries in Kathmandu

District. Tribhuvan University Central Library (TUCL): Home, Tribhuvan
University. Available at: [Link]

Giri, R.K. (2009). Accounting system used in small industries in makwanpur district.
Tribhuvan University Central Library (TUCL): Home, Tribhuvan University.
Available at: [Link]

Grande, E. U., Estebanez, R. P., & Colomina, C. M. (2011). The impact of accounting
information systems (AIS) on performance measures: Empirical evidence in

41
 Spanish SMEs. The international journal of digital accounting research, 11(1577-
8517) 25-43. Available at: [Link]

Hall, J. (2011). The Information System: An Accountant's Perspective in Accounting

Information System. USA, Massachusetts: Cengage Learning, 4–33.

Hamad, H. A. & Qader, K.S. (2023). The effect of accounting information system on
organizational effectiveness: Kurdistan region is a case of the study, Polytechnic
Journal of Humanities and Social Sciences. Available at:
[Link] [Link]/ptjhss/article/view/1053

Harash, E. (2015), The role of environmental uncertainty in the link between accounting
information system and performance small and medium enterprises in Iraq. Global
Journal of Management and Business Research, 15(2) 27-31.

Hosian, S. (2019). View of the impact of accounting information system on organizational

performance: Journal of Asian Business Strategy. Available at: [Link]
[Link]/[Link]/5006/article/view/4218/6539

Igbaria, M., Parasuraman, S., & Baroudi, J. J. (1996). A motivational model of

microcomputer usage. Journal of Management Information Systems, 13(1) 127-
143. Available at: [Link]

Ismail, N. A. (2009). Factors influencing AIS effectiveness among manufacturing SMEs:

Evidence from Malaysia. The Electronic Journal of Information Systems in
Developing Countries, 38(1) 1-19. Available at: [Link]
4835.2009.tb00273.x

Khalid, B. & Kot, M. (2021). The impact of accounting information systems on

performance management in the Banking Sector. IBIMA Business Review, 1–15.
[Link]

Lakshman, C. (2007). Organizational knowledge leadership: A grounded theory approach.

Leadership & Organization Development Journal, 28(1) 51-75.

Louadi, M. E. (1998). The relationship among organization structure, information

technology and information processing in small Canadian firms. Canadian Journal
of Administrative Science, 15(2) 180-199.
Available at: [Link]

42
Lutfi, A. (2021). Understanding the intention to adopt cloud-based accounting information
system in Jordanian SMEs, The International Journal of Digital Accounting
Research. Available at: [Link]

Olaofe-Obasesin, M. O., Akanni, W. A., Ekundayo O., Ajibola, O. & Ajibola, F. (2020).
Effects of accounting information system on organization performance in Nigeria.
International Journal of Software Engineering and Computer Systems, 6(2) 69–73.
Available at: [Link]

Nyathi, K. A., Nyoni, T., Nyoni, M., & Bonga, W. G. (2018). The role of accounting
information in the success of small & medium enterprises (SMEs) in Zimbabwe: A
case of Harare. Journal of Business and Management (DRJ), 1(1) 01-15.

R.N. etal, (2000). Accounting Principle, 6 th Edition, New Delhi, AITBS Publishers &
Distribution.

Romney, M.B. & Steinhart, P. J. (2003), Accounting Information System: 9 th edition,

Prentice Hall International.

Salehi, M., Rostami, V., & Mogadam, A. (2010). Usefulness of accounting information
system in emerging economy: Empirical evidence of Iran. International Journal of
Economics and Finance, 2(2) 186-195.
Available at: [Link]

Thomas, V., & Kleiner, B. H. (1995). New developments in computer software. Industrial
Management & Data Systems, 95(6) 22-26.

Yanti, R.E. & Pratiwi, C.W. (2022). Factors affecting the quality of accounting
information: The Role of Accounting Information Systems, Journal Riset
Akuntansi Kontemporer. Available at: [Link]

43
 APPENDICES

SURVEY QUESTIONNAIRE

Dear Respondents,
This is a survey of research work entitled “IMPACT OF ACCOUNTING
INFORMATION SYSTEM ON ORGANIZATIONAL PERFORMANCE: A CASE
STUDY OF SMEs IN DAMAULI” taking for partial fulfillment of the requirements for
the degree Bachelor of Business Administration. Please respond accurately and truthfully
as information will be confidential and will not be revealed under any circumstances.
Demographic Information:
Please tick (√) at the appropriate box
Name of the participant:
Gender: Male Female Other
Age: 20-29 30-39 40+
Education level: Undergraduate Graduate PhD
Business sector: _____________________

Accounting Knowledge
Scale
S.N Statement
SD D N A SA
1 I have appropriate accounting knowledge.
2 Accounting knowledge is essential for proper record of
transactions and processing.
3 My organization offers training to impart up-to-date
accounting knowledge.
4 Accounting knowledge is a significant component to
implement AIS.
5 I believe that accounting knowledge can enhance
organizational performance.

Management Support
Scale
S.N Statement
SD D N A SA
6 Management support is a pre-condition to implement
AIS.
7 As a manager, I always support to implement appropriate
AIS in my enterprise.
8 I believe that accounting information need to be updated
44
 and recorded chronicled.
9 As a manager, I am eager to invest and operate a suitable
AIS in my enterprise.
10 As a manager, I believe that a proper and effective
accounting system can reduce inefficiency and increase
performance.

Record keeping performance

Scale
S.N Statement
SD D N A SA
11 It is imperative to keep accounting record
appropriate and chronological.
12 AIS is worthy platform to keep proper accounting
track records.
13 Maintaining accurate records can increase efficiency and
reduce cost.
14 I always encourage my staffs to keep proper
transaction records systematically and scientifically.
15 Accounting records must be cross checked and validated.

Organizational Performance
Scale
S.N Statement
SD D N A SA
Organizational performance is a mutual contribution
16
from all employees.
AIS can contribute a lot in achieving organizational
17
performance.
There is a positive relationship between AIS
18
implementation and organizational performance.
Accounting department is an essential department for
19
my organization.
Accounting records are needed to updated and integrated
20
scientifically.
The conventional accounting system should be
21
modernized with information technology.

Thank you for giving your valuable time to fill up this research questionnaire.

45