Cor Jesu College

Sacred Heart Avenue, Digos City

Province of Davao Del Sur

GRADUATE SCHOOL DEPARTMENT

A Research Paper Presented to the Faculty of Graduate School Program of Master in Business
Administration Major in Organization and Management with a title

“Accounting Software Installation and Its Effect in Small and Medium Company’s
Productivity and Profitability in the Case of Salao Accounting Office”

Submitted by:

Brian Chris G. Fernandez

MBA- 1

Submitted to:

Dr. Rogelio Bayod and Dr. Erikka June Forosuelo

Graduate School Professors

 CHAPTER ONE

1.1 Introduction

Accounting has been described as a means whereby business owners and managers can figure
out where they have been, when they are going and possibly how to go where they want to go
(Baumback, 1983 P.235)

Record Keeping has become the foundation on which the totality modern business depends. This
is because without it, it will be impossible to ascertain the level of profitability and the level of
business susceptibility to fraud. Record keeping and good record management is also essential
for any corporate body to function effectively. ( Ademola et al. 2012)

Because accounting software when used in the context of business here in the City, it is intended
to support management's day-to-day activities, decision-making, and stewardship role. Machines
were created in 1880 to aid in the accounting system. As the years went by, developments in
information technology changed accounting systems and their associated processes. Even while
technology and accounting software have simplified several parts of small business accounting
administration, many of them continue to be vulnerable to both big and little accounting errors.
Accounting issues might include fraud, mistakes, lost financial records, and more. However
these problems can be often be avoided if the right accounting software is used and to generate
insightful financial reports that can help the business growth continuously.

Unfortunately, most Businesses here in the city of any size, may encounter accounting problems
that can be very problematic, Businesses may lose sight of and control over their financial health
as a result of inaccurate records, overstated profit, and countless other accounting errors. These
problems can have long-term effects, such as the need to downsize or even go out of business, if
they are ignored and left unresolved. It's vital to be aware of the most typical accounting
challenges that businesses face so you know what to avoid doing and how to recover from them
if your company encounters these problems.

To address the problem of having a manual system in accounting is for large firms, the price of
accounting software can range from hundreds to thousands of dollars. Using accounting software
could reduce the amount of labor required to produce financial statements and other reports.
Accounting software is widely used by small and medium-sized organizations because of
this, when using a computerized accounting system, reports are produced promptly. Managers
can run the business more effectively due to the reports produced by computerized accounting
software. In a manual accounting system, producing reports could make employees more
frustrated and force them to use out-of-date data information.

Adoption of Accounting Software becomes key factor in determining the survival and success of an
organization as companies require more information, be it financial or non-financial, to deal with a higher
scale of uncertainties in the competitive market and require data processing capacity and system to
ameliorate to suit their information needs (Van de Ven & Drazin, 19 g software. To start, one should
think about purchasing accounting software in advance. The 84) in this global economy era.

Many organizations that don't use accounting software frequently struggle to file all the required
paperwork, which leads to more disorganized data filing. However, these issues can be prevented
by using the appropriate accounting following are some of the issues that businesses who don't
utilize any accounting software encounter:

• Outdated management accounts

• Unused business reports
• Lack of information on profit margin
• Lack of accuracy
• Decision making challenges
• Uncertainty on business financial condition
• No audit trail
• Work inefficacy

Additionally, Lack of use and knowledge of accounting software leads to continued manual
accounting that may be very hard for business owners, especially SMEs, to monitor financial
health of their businesses. This leads SMEs not meeting their business goals (Alhatabat, 2020).
In a manual accounting system, a business's balance sheet and income statement are created by
hand. Financial statements for a corporation are generated using information from journal
entries. While accounting systems enable the creation of financial statements using data that is
kept in the database.

However, Accounting records kept on the manual system can be lost or damaged easily, such as by
coffee spills. On the other hand, records kept by a computer are likely to be safer because accounting
software system is backed up often. If pages are lost in a paper pad, firms have to recreate the transactions
by conducting research and writing them in again. In a computerized system, firms simply restore the
latest backup and add a few transactions that were not saved.
Processing financial transactions including accounts receivable and payables, invoicing, tax
compliance, general ledger, cash flow analysis, trial balance, income and expense statements,
balance sheets, and payroll, among others, is another benefit of using accounting software. An
organization can set future budgets and have an overview of its financial performance thanks to
the reports that are provided. Accounting software makes it possible to execute financial
transactions quickly and efficiently. When operations are automated, staff costs that would have
been used for manual data processing are reduced. Additionally, human accounting error is
decreased, and records are automatically updated.

To ensure the long- term survival of business Accounting developed from an organization's
routine operations to create useful information for decision-making. Thus, knowledge of
financial activities is essential to the existence, survival, and expansion of an organization.
Therefore, keeping a complete and accurate record of these operations is a good way to produce
the necessary accounting information. Every corporate entity, whether private or public, is
required to maintain financial activity records for the purposes of performance assessment.
However, the rapid advancements in information technology and the widespread use of
computers have had a significant impact on the way financial information is transmitted.

1.2 Goals /Objectives of the Study

This study's goal is to evaluate and analyze the impact of accounting software on the operations
of businesses in Digos City.

1. To identify the accounting software that may be used by small and medium scale
Companies is important for their survival in their business here in Digos City.

2. To determine how accounting software has influenced the collection of accounting data.

3. To understand how accounting software affects an organization's handling of accounting

data.

STATEMENT OF THE PROBLEM:

Accounting in today's world is quite difficult because the majority of papers are stored online.
The absence of source papers that served as transaction proof, the absence of an audit trail, a lack
of understanding of the computerized accounting data processing system, and electronic
transaction initiation and approval are a few of the difficulties.

Lack of use and knowledge of accounting software leads to continued manual accounting that
may be hard for proprietors, especially SME’s to monitor its financial health of their business.
This leads SME’s no meeting their business goals (Alhatabat, 2020).

Inadequate use of proper accounting system and financial record keeping in the business makes
impossible for the managers and owners to know how their business are functioning and in major
case, the first sign that something is wrong comes too late , the failure is already upon them.

Due to the above reasons, the researcher intends to conduct a study on the accounting system in
businesses here in Digos City. This study aims to determine the effect of accounting software
installation to the small company’s productivity and profitability.

1.3 Significance of the Study :

The importance of the study is to emphasized in the fact, that at end of the study, the findings
and conclusions made will help and positively affect the business owners in the following ways:

1. This study will serve as an insight to business owners in the organization that is in proper
used of accounting system in order to achieve its objectives to have a profitable business.

2. It will enlighten the business owners in Digos City on the study of accounting system on
their business performance.

1. 4 Research Questions:

1. What is the level of productivity and profitability before the installation of accounting
software of salao accounting office?

2. What is accounting software installation?

3. What is the level of productivity and profitability after the installation of accounting software
of salao accounting office?
4. How does accounting software affects the company’s profitability and productivity?

5. What mechanisms can be crafted to sustain the accounting software of salao accounting
office?