3bsa Thesis

Pamantasan ng Cabuyao

College of Business Administration and Accountancy

CHAPTER I

THE PROBLEM AND ITS BACKGROUND

INTRODUCTION

Every business organization must have an accounting information system which will

generate reliable financial information needed by the decision-makers in a timely manner. The

design and operation of a system must consider the anticipated users of the information and the

types of decision they are expected to make, the design of the system to meet the entity’s

information requirement defends on the firm’s size, nature of operations, volume of transaction

data, organizational structure, form of business and extent of government regulation. These will

influence the way in which the information and reported in financial instruments.

An accounting information system is the combination of personnel, records and procedures

that a business uses to meet its need for financial information. Most firms have an accounting

manual that specifies the policies and procedures to be followed in accumulating information

system. This manual details what events are to be recorded in the accounts, and when and how the

information is to be classified and accumulated (Ballada, 2012).

Accounting information system is an essential attribute a business enterprise should have

for it serves as its backbone—a backbone that connects all of the functions of a business enterprise.

It is a combination of personnel, records, and procedures that a business uses to meet its need for

financial information. It has become a necessity for businesses especially those bigger companies

to be able to organize its day-to-day and end-of-period financial transactions and satisfy the

demand for a more accurate and reliable financial information. An enterprise can choose to employ

either among three types of accounting information system which are all designed to capture

information regarding accounting events to prepare financial statements. These are the manual or

traditional, which utilize paper-based journals (general and special) and ledgers; the computer-

based transaction system which replaces paper records with computer records, and; the database

system which embed accounting data within the business event data on which they are based.

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Taxation is the process or means by which the sovereign, through its lawmaking body,

raises income to defray the necessary expenses of the government. Taxation, as a power of the

State, is inherent in sovereignty. Most people receive their initial exposure to the Philippine

income tax system when first faced with the responsibility of filing out government forms—not a

very challenging activity (Ballada, 2012). But in the modern times, a lot of the mechanical chores

of tax practice are already handled by computer systems that allow professionals on tax and

managers to put a lot of their time and attention to more important matters.

Small and medium enterprise or small and medium-sized enterprise (SMEs, small and

medium-sized businesses, SMBs and variations thereof) are companies whose personnel numbers

fall below certain limits. The abbreviation "SME" is used in the European Union and by

international organizations such as the World Bank, the United Nations and the World Trade

Organization (WTO). In most economies, smaller enterprises outnumber large companies by a

wide margin. SMEs are said to be responsible for driving innovation and competition in many

economic sectors (Wikipedia, no author, 2008). In the Philippines, 99.1% of the businesses are

small and medium enterprises (SMEs) and only 0.99% are large enterprises. Republic Act No.

9501, The Magna Carta for Micro, Small and Medium Enterprises (MSMEs), signed by President

Gloria Macapagal Arroyo on 23 May 2008 defines micro enterprises as entities with total assets of

not more than Php 3,000,000, small enterprises as The new law, R.A. 9501 amends the 17-year old

R.A. 6977 or the Magna Carta for Small Medium Enterprises. SMEs are perceived to have greater

linkages to micro-enterprises (backward linkage) and medium and large businesses (forward sub-

contracting links). Among the rationale for developing SMEs in the Philippines includes the fact

that they use resources more efficiently than large enterprises. The Philippines’ advantages in

terms of investment environment includes having an open market economy, reliable infrastructure

support, available special economic zones and strategic location, hospitable lifestyle, competitive

investment incentives and quality human resources. Philippine SMEs usually join a bigger

organization, cooperative and association.

This study was conducted to assess the adoption of accounting information system of small

and medium enterprises in selected barangays in Cabuyao as a basis for effective taxes collection.

2

http://en.wikipedia.org/wiki/World_Trade_Organization

http://en.wikipedia.org/wiki/World_Trade_Organization

http://en.wikipedia.org/wiki/United_Nations

http://en.wikipedia.org/wiki/World_Bank

http://en.wikipedia.org/wiki/European_Union

http://en.wikipedia.org/wiki/Company_(law)



THEORETICAL FRAMEWORK

In economics, the Laffer curve is a theoretical representation of the relationship between

government revenue raised by taxation and all possible rates of taxation. It is used to illustrate the

concept of taxable income elasticity (that taxable income will change in response to changes in the

rate of taxation). The curve is constructed by thought experiment. First, the amount of tax revenue

raised at the extreme tax rates of 0% and 100% is considered. It is clear that a 0% tax rate raises no

revenue, but the Laffer curve hypothesis is that a 100% tax rate will also generate no revenue

because at such a rate there is no longer any incentive for a rational taxpayer to earn any income,

thus the revenue raised will be 100% of nothing. If both a 0% rate and 100% rate of taxation

generate no revenue, it follows from the extreme value theorem that there must exist at least one

rate in between where tax revenue would be a maximum. The Laffer curve is typically represented

as a graph which starts at 0% tax, zero revenue, rises to a maximum rate of revenue raised at an

intermediate rate of taxation and then falls again to zero revenue at a 100% tax rate.

One potential result of the Laffer curve is that increasing tax rates beyond a certain point

will become counterproductive for raising further tax revenue. A hypothetical Laffer curve for any

given economy can only be estimated and such estimates are sometimes controversial. The New

Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have

varied widely, with a mid-range of around 70%.

Most governments take revenue which exceeds that which can be provided by non-

distortionary taxes or through taxes which give a double dividend. Optimal taxation theory is the

branch of economics that considers how taxes can be structured to give the least deadweight costs,

or to give the best outcomes in terms of social welfare. The Ramsey problem deals with

minimizing deadweight costs. Because deadweight costs are related to the elasticity of supply and

demand for a good, it follows that putting the highest tax rates on the goods for which there is most

inelastic supply and demand will result in the least overall deadweight costs. Some economists

sought to integrate optimal tax theory with the social welfare function, which is the economic

expression of the idea that equality is valuable to a greater or lesser extent.

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If individuals experience diminishing returns from income, then the optimum distribution

of income for society involves a progressive income tax. Mirrlees optimal income tax is a detailed

theoretical model of the optimum progressive income tax along these lines. Over the last years the

validity of the theory of optimal taxation was discussed by many political economists. Canegrati

(2007) demonstrated that if we move from the assumption that governments do not maximise the

welfare of society but the probability of winning elections, the tax rates in equilibrium are lower

for the most powerful groups of society, instead of being the lowest for the poorest as in the

optimal theory of direct taxation developed by Atkinson and Joseph Stiglitz

Silver et al. (1995) provided two views on (IS) and IS-centered view that includes software,

hardware, data, people, and procedures. A second managerial view includes people, business

processes and Information Systems.

There are various types of information systems, for example: transaction processing

systems, office systems, decision support systems, knowledge management systems, database

management systems, and office information systems. Critical to most information systems are

information technologies, which are typically designed to enable humans to perform tasks for

which the human brain is not well suited, such as: handling large amounts of information,

performing complex calculations, and controlling many simultaneous processes.

Information technologies are a very important and malleable resource available to

executives. Many companies have created a position of Chief Information Officer (CIO) that sits

on the executive board with the Chief Executive Officer (CEO), Chief Financial

Officer(CFO), Chief Operating Officer (COO) and Chief Technical Officer (CTO). The CTO may

also serve as CIO, and vice versa. The Chief Information Security Officer (CISO) focuses on

information security management.

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SMEs:Nature of business operationsAccounting informa-tion system employedProcedurespayinglocal govern-ment taxes



CONCEPTUAL FRAMEWORK

Conceptual Paradigm

Input Process Output

Data AnalysisAssessment

Data CollectionAnd

Organization

Implications on effective taxes

collection of the local government

on SMEs:

FEEDBACK

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STATEMENT OF THE PROBLEM

The study aimed to assess the adoption of accounting information system of small and medium

enterprises in selected barangays in Cabuyao as a basis for effective tax collection. Specifically, it

sought to answer the following questions:

1) What is the nature of operations of the small and medium enterprises in selected barangays

in Cabuyao?

2) What is the accounting information system adopted by small and medium enterprises in

selected barangays in Cabuyao:

1.1 Manual/Traditional system

1.2 Computer-based transaction system

1.3 Database system

3) What are the procedures followed by such small and medium enterprises in paying local

government taxes in terms of:

2.1 Tax base and tax rate

2.2 Computation of tax due

2.3 Period/Date of payment

4) What is the significant relationship between the accounting information system adopted,

and the procedures in paying local government taxes followed by small and medium

enterprises in selected barangays in Cabuyao?

5) What is the significant relationship between the accounting information system used and

the nature of operations of the small and medium enterprises in selected barangays in

Cabuyao?

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OBJECTIVES

The following are the objectives of the study:

1) To determine the nature of operations of the small and medium enterprises in selected

barangays in Cabuyao

2) To determine the accounting information system adopted by small and medium enterprises

in selected barangays in Cabuyao:

1.1 Manual/Traditional system

1.2 Computer-based transaction system

1.3 Database system

3) To deternine the procedures followed by such small and medium enterprises in paying local

government taxes in terms of:

2.1 Tax base and tax rate

2.2 Computation of tax due

2.3 Period/Date of payment

4) To determine the significant relationship between the accounting information system

adopted, and the procedures in paying local government taxes followed by small and

medium enterprises in selected barangays in Cabuyao

5) To determine the significant relationship between the accounting information system used

and the nature of operations of the small and medium enterprises in selected barangays in

Cabuyao

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STATEMENT OF THE HYPOTHESIS

Null Hypothesis: There is no significant relationship on the adoption of Accounting Information

System to the Effectivity of Taxes collection of the Small and Medium Enterprises in selected

barangays in Cabuyao..

Alternative Hypothesis: There is a significant relationship on the adoption of Accounting

Information System to the Effectivity of Taxes collection of the Small and Medium Enterprises in

selected barangays in Cabuyao..

Null Hypothesis: There is no significant relationship between the Accounting Information System

used and the Nature of Operations of the Small and Medium Enterprises in selected barangays in

Cabuyao.

Null Hypothesis: There is a significant relationship between the Accounting Information System

used and the Nature of Operations of the Small and Medium Enterprises in selected barangays in

Cabuyao.

SIGNIFICANCE OF THE STUDY

The study is significant since it would help to assess the effect of cityhood of

Cabuyao in the profitability of SME which is essential in the economic growth of economy.

Government, as they would be able to find out how information systems, particularly

accounting information systems contribute to their collection of taxes from a rapid-growing form

of business like SME and develop ways to support them.

Business owners, as they would able to decide what the edges of using accounting

information systems are and develop this.

New business entrants, as they would be able to determine the importance and advantages

of using accounting information system and eventually employ one.

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Potential Investors, as they would be able to decide that investing in AIS-adopting SMEs

will be a better choice.

Future Researchers, as they would be able to gather necessary information regarding this

topic and they would be benefited in conducting a research that is in line with this.

SCOPE AND DELIMITATION

This study limits its coverage on the SME only.Its main purpose is to assess the adoption

if accounting information system as a basis for effective taxes collection. Moreover, the study

would like to propose recommendations regarding the views of SME owners.

This study considers factors such as taxes collection that will possibly be affected by the

adoption of accounting information system of SMEs. Each of the SME respondents is given the

same questionnaire to answer. This study focuses on the SMEs in Cabuyao City only.

DEFINITION OF TERMS

Taxation. It refers to the act of a taxing authority actually levying tax. Taxation as a term

applies to all types of taxes, from income to gift to estate taxes. It is usually referred to as an act;

any revenue collected is usually called "taxes."

Tax. Sum of money demanded by a government for its supportor for specific facilities or services,

levied upon incomes,property, sales, etc.

Accounting. The skills or practice of maintaining and auditing accounts and preparing reports on

the assets, liabilities, etc. of a business.

SME (Small and Medium Enterprises). It refers to companies that are larger than the small

office/home office (SOHO), but not huge.

Local Government. The administration of the civic affairs of a city, town, or district by its

inhabitant rather by the state or country at large. The governing body of a town or district.

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Enterprise. It is a company organized for commercial purposes; business firm.

Information System. An integrated set of components for collecting, storing, processing and

communicating information.

Tax Rate. The percentage of the value of a property to be paid as a tax.

Tax Base. Collective value of taxable assets.

Income Tax Return. Document giving the tax collector information about the taxpayer’s tax

liability; ‘his gross income was enough that he had to file a tax return.”

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CHAPTER II

REVIEW OF THE RELATED LITERATURE AND STUDIES

It is also important to relate some literature and studies to the research that will help the

research to understand more about the study. In this chapter, the researchers created the link the

between the proposed research and the researches already done.

REVIEW OF FOREIGN LITERATURE AND STUDIES

According to Hopwood, accounting change over time. However relatively little is known of

the preconditions for such change, the process of change or its organisational consequences.

Existing perspectives on accounting change are reviewed and evaluated. Thereafter three examples

of accounting change are discussed. Based on these cases, a number of theoretical issues relating to

the understanding of the process of accounting change are examined. Emphasis is placed on the

diversity of factors implicated in accounting change, the constitutive as well as reflective roles

of accounting and the ways in which accounting change can shift the preconditions for subsequent

organizational changes (p.1, n.d.).

Due to rapid globalization in this world. Accounting processes has become more complex

and the need to change the processes involved therein are needed.

It has been suggested recently that the accounting systems used in developing countries

may be irrelevant to their needs because they originate in Western countries with different cultural

values. The accounting literature on this point, however, is vague in its assessment of exactly what

aspects of Western accounting systems fail to meet the test of relevance. Furthermore, it is not

clear whether the differences between the needs of users in various countries are differences in

kind or only differences in degree. This article analyses these issues by introducing technical

considerations in addition to the behavioural ones usually discussed and by separating out

problems of accounting measurement from problems of accounting disclosure. This distinction is

used to argue that it is the specific disclosure rules of particular calculations inherent in Western

accounting systems rather than the transaction cost database that are most likely to fail to satisfy

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the needs of users in developing countries. The effect of the importation of the French Unified

Accounting System to Lebanon is examined and an amended version of the Hofstede-Gray cultural

accounting framework is used to clarify the concept of cultural relevance (Baydoun, Willet, 2005).

That is why it was really important to give emphasis to the role of information systems

(IS) research and practice associates technology innovation with the context within which it is

embedded. It identifies three principles to be followed in order to address the contextual processes

involved in IS implementation: first, technology innovation should be considered in relation to

socio-organizational change; second, analysis should consider not only the local organizational,

but also the national and international context; and third, analysis should consider both the

technical/rational decisions and actions involved in the innovation process and the cultural, social

and cognitive forces of such a process. These principles are demonstrated with the analysis of a

case study of organizational reform in Cyprus.

Within the past ten years, literature concerned with accounting information system design

has increased significantly. More importantly, perhaps, the number of distinct approaches or

methodologies to information systems research and design has also multiplied. For instance, a

recent American Accounting Association (1971) committee report identified statistical decision

theory, information economics, cybernetics, communication theory, measurement theory, and

behavioral theories as providing both research methodologies and a body of knowledge which

underly information theory and ultimately accounting (Criver, Mock, n.d).

The concept of New Public Management (NPM) has assumed a dominant role in the

reforms of the public sector in the 1980s and 1990s. There has been considerable speculation on

the origins of NPM. The focus of this special issue is more on what NPM is what it has become

and how accounting is implicated in this phenomenon. The NPM trend has been characterized as

having a number of dimensions: as a component part of restructuring of the public services,

particularly where there is decentralization and corporatization; the displacement of old-style

public administration with a new management focus in public services; as part of the desire to

place public services in market or quasi-market services, particularly where the trappings of the

market place- the need for contracts, employee incentives to perform—are deployed in the name of

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a greater efficiency in the public services; a more explicit role for the management (in a top-down,

hierarchical, functional concept) of the public services; the perceived need to rationalize public

services and, above all, the stress on quantification as a means of demonstrating achievements

(efficiency gains, new levels of performance) and of holding responsible persons accountable.

These strands of the NPM are evident in many of the reforming economies. Guthrie et al. (this

issue) show how this NPM direction is a global phenomenon (Lapsley, Financial Accountability

and Management, 2005).

Accounting theoreticians have argued that control system should be modified in accordance

with the business strategy of a firm. This study tests this hypothesis by examining differences

in accounting control system attributes between two groups of firms following distinctly different

strategies. Interview data and questionnaire data are used to provide evidence of the ways in which

firms align their control system and strategy. In addition, preliminary evidence is discussed which

suggests a relationship between accounting control systems, business strategy and firm

performance

Most of the research to date concerning the design of an accounting information system has

taken a rather narrow and inflexible view of accounting information. The primary intent of this

paper is to provide a broader and more adaptive framework for designing such. A contingency

approach, which takes into account the environment, organizational attributes, and managerial

decision making styles, is advocated. In this context, several hypotheses are offered concerning the

requisites of accounting information.

There are significant positive correlations between the performance of an AIS and the

influence factors such as user involvement, capability of IS personnel and organization size. It was

also proved that the relationships between performance of AIS and influence factors are

significantly influenced by the evolution level of IS. Hence for the success of AIS, each influence

factor should be considred differently in the degree of importance according to the level of IS

evolution.

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The roles of user participation (UP) in the design of Management Accounting Information

System(s) (MAS) have long received the attention of MAS researchers. By surveying business

firms through a structured questionnaire, this study investigated the interactions among contextual

variables (Task uncertainty and organizational structure), information characteristics (Scope,

timeliness and aggregation) and UP. The results suggest that under high task uncertainty,

aggregated and timely information with high UP is positively associated with increased MAS

performance. However, when the task uncertainty is low, the UP makes no impact on the relation

between performance and information characteristics. In a less structured organization, broad

scope, timely and aggregated information with high UP has a positive influence on the

performance. In mechanistic organization, narrow scope and disaggregated information through

the high UP can lead to higher MAS performance (Choe, n.d.).

Accounting system not only promote a particular view of the activities of an organization

or a subunit, but in their very implementation and operation ‘mobilize’ other organizational

members in a particular direction. The implications of such an interpretation are explored in this

paper. Firstly through a discussion of some of the theoretic constructs that have been proposed to

frame ANT research. Secondly an attempt is made to relate some of these ideas to aspects of the

empirics in a qualitative case study. The case site is in the health sector and involves the

implementation of a casemix accounting system. Evidence from the case research is used to

exemplify aspects of the theoretical constructs (Lowe, n.d.).

REVIEW OF LOCAL LITERATURE AND STUDIES

In developed countries, governmental accounting is considered as an integral part and a

successful aspect of public sector reforms. Besides being a tool for government financial

management modernisation, accounting is regarded as a weapon against fraud and waste in

government. The aim of this article is to compare, taking the IPSAS No.1 as a benchmark, the

information content of the financial statements submitted by the central governments of Anglo-

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Saxon, Nordic, European Continental and Mercosur zone countries. The results give us a point of

reference as to where the central governmental accounting of each country studied lies in the

‘spectrum’ from cash to full accrual accounting and to what extent the IPSASs are able to fit into

diverse public administration styles in order to improve the transparency, accountability and

reliability of the financial information disclosed (Torres, 2004).

Research was conducted to establish the factors that lead to the successful adoption of

Information Technology (IT) by Small and MediumEnterprises (SMEs) in today’s turbulent times.

The opinions of owners and managers of Australian SMEs on 10 factors representing modern IT

adoption practices were obtained. The analysis of their responses identified three major IT

acquisition phases and their significance. First, SMEs should assess IT benefits, the organisational

culture and IT suitable for the firm. Second, they should determine if sufficient internal resources

are available and appropriate procedures exist for the successful selection and implementation of

IT. Third, SMEs need to evaluate the external environment, support and resources, particularly if

inhouse resources and support are lacking. At the end of each phase, the decision should be made

on whether or not to continue with IT acquisition. The recommended phased approach minimises

the overall risk of technology acquisition

The adoption of Information Technology (IT) in a small business, especially in its

accounting processes, contributes to a small business’ success. The researchers conducted the

study to be able to determine the factors that influence the Small and Medium Enterprises (SMEs)

in the Philippines to adopt IT in their accounting processes. Prior studies (Thong, 1999) presented

four categories that impact a small business owner’s decision to adopt IT. These include the

characteristics of the organizational decision makers, technological innovation, organization, and

environment in which the organization operates. Results showed that even though some of these

really do affect the decision of SMEs for IT adoption in their accounting system, these

relationships are not statistically significant (Lim et al,n.d.).

Generally Accepted Accounting Principles (GAAP) and the more recent International

Financial Reporting Standards (IFRS) form the basis of the accounting transactions and reports

used in taxation accounting. However this has always been an uneasy relationship. One apparent

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factor contributing to this is that these two accounting processes serve different purposes. The aim

of this study is to research international literature and experience to gain an insight into the basis

and form of this divergence.

According to Sy (2009), the distinction between tax avoidance and tax evasion is very clear

in the academe. Tax books have often defined tax avoidance as an attempt to minimize the

payment or altogether eliminate tax liability by lawful means, while taxevasion refers to the

elimination or reductions of one's correct and proper tax by fraudulent means. The consequence of

each case is also clear. The former is not criminally punishable while the latter is criminally

punishable. However, the distinction between the two cases seems to have been blurred by the

inconsistent practice of the government in its treatment of the subject matter.

Very often, the Bureau of Internal Revenue (BIR) asks for a valid business purpose whenever a

taxpayer enters into a transaction which has the effect of reducing tax liability.

For instance, when a father sells a parcel of land to his son, the BIR looks into the financial

capability of the son to buy the subject land, in order to ensure that the sale was not for the sole

purpose of saving on the payment of estate taxes. The taxpayer has to come up with a valid reason

for selling his land to his son. An honest answer from the taxpayer that thetransaction was for

purposes of tax avoidance will not be acceptable to the BIR. The BIR will impose the higher tax

rate in its assessment, as well as the corresponding interests and penalties. This situation leads one

to wonder whether tax avoidance is legal or not in Philippines.

In recognition of their substantial contribution to the economy both in terms of number of

enterprises and workers, the Philippine government has put in place a number of policies and

programs designed specifically to boost SME productivity and competitiveness in the country.

However, the performance of SMEs in the last decade has not been vigorous enough to boost the

Philippine manufacturing industry. As such, the deepening of high technology industries in terms

of the creation of backward linkages has remained weak. While the country’s exports of high

technology products have grown rapidly, the value added of these exports is very low due to the

limited links of large domestic and foreign companies to the domestic economy. Rapid changes in

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the international trade and the growing complexity of global production system, pose a significant

challenge to Filipino SMEs.

Informal payments are a frequently overlooked source of local public finance in developing

countries. Informal taxation is widespread, particularly in rural areas, with substantial in-kind labor

payments. The wealthy pay more, but pay less in percentage terms, and informal taxes are more

regressive than formal taxes. Failing to include informal taxation underestimates household tax

burdens and revenue decentralization in developing countries. They propose a simple model of

information and enforcement constraints that parsimoniously explains the patterns in the data

(Singhal, Olken,).

The new Philippine Financial Reporting Standard for Small and Medium-sized Entities

(PFRS for SMEs) became effective on January 1, 2010, with earlier application allowed. The

standard was adopted by the Financial Reporting Standards Council (FRSC) from the international

version issued by the International Accounting Standards Board (IASB). The Securities and

Exchange Commission (SEC) has made the PFRS for SMEs a part of its rules and regulations,

requiring covered companies to implement the new standard starting with 2010 financial

statements to be filed with the SEC (Punongbayan & Araullo).

Small and medium enterprises (SMEs) play a crucial role in the development of the Philippine

economy. They represent 99.6 per cent of all businesses registered in the country and employ 69.9

per cent of the total labour force. In addition, they account for 32 per cent of the country's gross

domestic product (GDP). Underscoring the importance of SMEs in the country's economic growth

and development, President Gloria Macapagal-Arroyo has included in her 10-point national

development agenda the creation of 6-10 million jobs in six years, through more opportunities

given to entrepreneurs, a tripling of the amount of loans available to SMEs, and the development

of 1-2 million hectares of land for agri-business.

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SYNTHESIS OF THE REVIEW OF THE RELATED LITERATURE AND STUDIES

Necessary and relevant information were extracted from the previously mentioned related

literature and studies to serve as a guide and reference for the proponents to have a wider and

clearer overview about the perceived effect of adopting accounting information system on the

effectivity of small and medium enterprises. The researchers carefully analyzed the researches and

then relate it to the current study.

The results and findings suggest that small and medium enterprises are very important

factors in considering the development of a country. That is why it is also important to consider the

accounting processes involved therein. The Philippine Financial Reporting Standards has adopted

accounting standards that is related to the conduction of business operations of small and medium

enterprises. It emphasized that proper accounting treatment must be made for small and medium

enterprises in order to arrive at the right income which will become the basis for the tax to be

imposed.

.

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CHAPTER III

RESEARCH METHODOLOGY

This Chapter includes the research design , locale of the study, sampling design, population

or respondents, and the research method/instrument of the study.

RESEARCH DESIGN

In order to construct the investigation about the significant relationship of accounting

information system and effectivity of collecting government taxes, the researchers utilized the

inferential approach. This method is used in order to describe, analyze and interpret data of the

study. Aside from that, this method is designed to give conclusion in a given two or more

variables. It is either used to describe whether there is a significant difference or significant

relationship between the two given variables. Over-all, the inferential research type of method is

suitable since it involves giving conclusions from the given facts, condition, analysis and

interpretation of data and information gathered.

RESPONDENTS OF THE STUDY

In order to conduct the research, the researchers chooses the respondents of the study which

are focused only to the head of accounting department of selected small and medium enterprises in

Cabuyao, Laguna. There is also a set of questionnaires that are carefully prepared and logically

intended for them.

VALIDATION OF THE INSTRUMENT

The questionnaires were presented to the professors and adviser in accountancy. The

researchers anticipated that there would be modifications changes and deletions of the different

items that are listed. The final draft of the questionnaire was finalized and these set of

questionnaires will be distributed to the respondents and the data accumulated from these

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instruments will become the basis of finding the conclusion in finding the conclusion in finding the

significant relationship between accounting information system and effectivity of taxes collection.

EVALUATION

The questionnaire was divided into five major categories. The first major category is about

the nature of business operations. The second category is about the type of the accounting

information system that the small and medium enterprises used in terms of whether it is manual,

computerized-based or data based system. The third question is about the procedures followed by

such small and medium enterprises in paying the local government taxes in terms of tax base and

tax rates computation of tax due and period/date of payment. The fourth and fifth category will

generate whether there is a significant relationship between accounting information system and

effectively of taxes collection and the significant relationship between the nature of operation and

accounting information system. The fourth and third category will be rated with the interpretation

of whether there is significant relationship or not.

YES

NO

DATA GATHERING PROCEDURES

The researchers believed that the thay can generate the conclusion by conducting surveys.

Aside from the surveys, the researchers also read articles, and other literary works which is related

to the study. Another important thing that the researchers have made is by reading books to know

the basic principles behind this study.

In order to conduct the study. The researchers first get permission from the perspective

personnel from Pamantasan ng Cabuyao. And then ask directly to the accounting heads which is

indeed, the respondents.

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STATISTICAL TREATMENT

The following are the statistical treatment of the study:

Pearsons R Correlation

Where:

Cov(y,x) = the covariance of y and x

Var(x)= the variance of x

Var(y)= the variance of y

ANALYSIS OF VARIANCE (ANOVA) – One Way

F=

Where:

= denotes the sample mean in the ith group

ni = is the number of observations in the ith group

= denotes the overall mean of the data.

Yij = is the jth observation in the ith out of K groups

N = is the overall sample size.

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http://en.wikipedia.org/wiki/Average



THE WEIGHTED MEAN (X)

X= ∑ fxi

N

where:

X = the weighted mean

f = frequency

xi= the scores of the data

N = the number of samples

∑ = the summation notation

The Percentage (P) was used to describe the profile of the respondents.

P = f x 100 where: P = the percentage value

N f = the number of frequency in the interval

n = number of data

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3bsa Thesis