Accounting Information Systems and Financial Performance of Small and Medium Enterprises in Kirinyaga County, Kenya.
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Date
2023
Authors
Mwangi, Stephen
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Maintaining solid accounting1records is a significant component that contributes1to
appropriate decision-making because it is the source of essential
informational1requirements. Indeed, in the SME sector, the quality of accounting
information used has a favorable link with an entity's success. In small and medium
businesses, information and technology adoption is slow and has also harmed SMEs in
Kirinyaga County and Kenya. The issue of poor accounting system acceptance can be
linked to the initial goal of adopting information technology, which was primarily aimed
to substitute the manual accounting processes, which has since hampered future use and
investigation of the systems' benefits. This study sought to determine how
accounting11information systems, influence the financial1performance of SMEs.
Precisely the research sought to evaluate the influence of accounting information1systems
records, accounting information1systems service quality, accounting information1systems
data quality and accounting systems quality on the SMEs financial performance in
Kirinyaga1County Kenya. The findings of this study helped SMEs improve their financial
reporting and record-keeping which will benefit management in monitoring, planning on
decision making ensuring their survival1in the business sector. The population of interest
comprised of 1420 owners and managers which were registered with Ministry of Trade in
Kirinyaga County. The descriptive research technique was used for this study. The
population of interest comprised of 1,420 owners and managers which were registered with
Ministry of Trade in Kirinyaga. Stratified sampling through the use of Yamane’s formula
was applied. Primary1data was used for this study and was obtained using a questionnaire
which was quantitative in nature and thus close-ended questions was used. Quantitative
data analysis using descriptive statistics was adopted. Additionally a multiple regression
and Pearson correlation analysis was used.The accounting information systems1records
had a significant positive effect on financial performance of SMEs in Kirinyaga County,
Kenya. This indicates that improving the way SMEs store and prepare their buy and sales
ledgers helps enhance their financial performance. This indicates that financial success has
a very strong positive relationship with competent bookkeeping. The results on accounting
information systems service quality indicates that the variable had a positive and significant
effect on financial performance. The results on accounting information systems data
quality indicated that the variable had a positive and significant effect on financial
performance. The accounting information systems quality had a positive significant effect
on financial performance. The SMEs have made significant investments in accounting
information system quality in order to improve their day-to-day operations. But to majority
of the SMEs such an investment does not produce the intended results due to system failure,
system error, and the generation of incorrect data, all of which impact decision-making
processes. Relevance, correctness, understandability, and dependability of the accounting
information systems quality were evaluated with performance, based on the premise that
there is a link between accounting information quality and small and medium company
performance.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirement for the award of Masters Degree in Business Administration (Finance Option) of Kenyatta University May, 2023.
Keywords
Accounting Information Systems, Financial Performance, Small and Medium Enterprises, Kirinyaga County, Kenya