Imperial Journal of Interdisciplinary Research (IJIR)

Vol-3, Issue-5, 2017

ISSN: 2454-1362, http://www.onlinejournal.in

Impact of accounting software for

Business Performance
D.M.J.Wickramsainghe1, RMMD Pemarathna2, NHK Cooray 3 &
TDSH Dissanayake4
1,2,3,4
Faculty of Management Studies, Rajarata University of Sri Lanka

Abstract: The major problematic source towards the currency and a single set of accounting principles,
organizations and corporates is the accounting field companies may have to deal with multiple currencies
by the way its intended users need to clarify the and follow a myriad of accounting and tax rules. As
accounting soft wares which are suitable on the basis a result, there is an increased demand for new and
of their day today accounting and business needs. more sophisticated accounting software packages
Mainly the fact in Anuradhapura area is the capable of handling international accounting issues
incomplete records and unauthorized access of data (Ajay Adhikari, 2004)[2]
by unsuitable accounting packages and apps. The
Accounting Information Systems (AIS) are a tool
fundamental error occurring in all kind of working
which, when incorporated into the field of
environment and organizations are not finding the
Information and Technology systems (IT), were
correct solution toward accounting and decision
designed to help in the management and control of
making by the selection of main accounting packages
topics related to firms’ economic-financial area. But
and apps. The key course of action is how to choose
the stunning advance in technology has opened up
accounting software and apps by the businesses in
the possibility of generating and using accounting
Anuradhapura area. Which influence in decision
information from a strategic viewpoint. Since this is
making process.
important for all firms, it is more important even for
medium-sized and small ones which need this
Abstract: Accounting, business, performance
information to deal with a higher degree of
uncertainty in the competitive (EL Loudi, 1998)[5]
1 Introduction Thus, they need to improve their systems and data
Accounting has come to occupy an ever more processing capacity to match their information needs
significant position in the functioning of modern (Andrew H Van de Ven, 1985)[3]Accounting
industrial societies (Stuart burchell, 1980)[13] information systems automates the accounting
Accounting takes a vital role in operating an process improving efficiency and cutting down costs.
organization. Every business must keep track of And it tends to be more accurate, faster to use, and
financial information that relates to its business less subject to error than its manual counterpart. In
activities. It also has various processes; some simple, today's computerized, interconnected, global
others complex and burdensome. But as the business business environment, accounting information
grows, acquires new customers, enters new markets systems became the ‘engine of growth’ in business
and keeps pace with constant changes in information organizations. Therefore it involves the
technology, companies need to maintain highly computerization of accounting information systems
accurate and up-to-date accounting, inventory and which is established in order to facilitate decision
statutory records. With a substantial increase in the making. Accounting information system is a
volume of accounting transactions and increase in computer based system that increases the control and
exposure of information to errors due to complexity enhances the corporation in an organization. In
of these accounting systems, there was a need for a managing an organization and implementing an
system which could store and process accounting internal control system, the role of accounting
data with increased speed, storage, and processing information system is very crucial (Nicolau, 2006)[9]
capacity. In order to meet the growing need for
accurate and up-to-date information accounting By using Accounting information systems
integrated with information technology by organization can enhance their performance.
introducing accounting software to the world. According to Dr Dawhla Accounting information
system implementation and success have been
Companies all over the world are becoming more comprehensively researched but the contemporary
international in their outlook. Competing in the literature shows slight evidences of the relationship
global marketplace, however, entails a new set of between Accounting Information System (AIS) and
accounting challenges. Instead of dealing in a single performance measures. AIS can positively impact on

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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-3, Issue-5, 2017
ISSN: 2454-1362, http://www.onlinejournal.in

organizations by the following; better adaptation to a system quality is not directly impact toward
changing environment, better management of arm’s organisation performance. But if system is
length transactions and a high degree of technically sound, error-free, easy to learn, user-
competitiveness (Dr. Daw Hla, 2015)[4].The friendly, well documented and flexible those features
appropriate design of AIS supports business are indirectly related to organization performance.
strategies in a way that it increases the organizational As well as system quality indirectly affect
performance (RH Chenhall, 1986)[11] Asserts that organization impact through information quality.
increasing AIS investment will be leverage for Finally in this study concluded information quality,
achieving a stronger, more flexible corporate culture service quality and system quality affect to
to face persistent changes in the environment (Dr. organizational impacts directly or indirectly.
Daw Hla, 2015)[4].
However, the purpose of the study was to
In other hand, Organizational performance is a examine the impact of accounting software for
function of the financial performance, performance business performance on profitability level of small
management, and accounting information system. scale business. To measure the business performance
Fitness will exist in the combination of strategy and can be used system quality, information quality and
AIS that contribute to financial performance (Zejac service quality. We focused on selected 100 small
and Pearce, 1990). scale businesses which are familiar with accounting
packages in Anuradhapura district. We aimed to
As stated in Dr dawl hla it was found that
generate finding that would relevance to and expand
accounting information system is of great importance
current knowledge.
to both businesses and organization in which it helps
in facilitating management decision making, internal We measured the business performance by using
controls ,quality of the financial report ,and it variables such as Reliability, Efficiency and user
facilitates the company’s transaction and it also plays friendliness of Accounting Software. According to
an important role in economic system, and the study the previous research result organization can increase
recommends that businesses, firms and organization their performance by using accounting software
should adopt the use of AIS because adequate
In sum we formulated following research
accounting information is essential for every
hypothesis;
effective decision making process and adequate
information is possible if accounting information H1: Accounting Information system affects
systems are run efficiently also, efficient Accounting reliability of information of financial statement.
Information Systems ensures that all levels of
management get sufficient, adequate, relevant and H2: Accounting information system affects
true information for planning and controlling efficiency of information of financial statement.
activities of the business organization. H3: User Friendliness of Accounting Information
Organizational impact represents the firm-level system affects business performance of organization.
benefits received by an organization because of IS
applications. The organizational impact of IT is 2 Methods
realized through business performance
(e.g.,Brynjolfsson and Hitt, 1996; Kohli and Devaraj, 2.1 Population and Sample
2003;Kearns and Lederer, 2004; Osei-Bryson and
Ko, 2004; Rai et al., 2006), which leads to business
Participants were 100 employees who work in
value (e.g.,Barua et al., 1995;Mukhopadhyay et al.,
private and public organization which familiar with
1995; Tallon et al., 2000; Lee, 2001; Melville et
accounting packages in Anuradhapura District. The
al.,2004).According to N. Gorla et al. IT quality is a
final sample included 42% male employees and 58%
multidimensional measure, it is important to
Female employees and also 24% were from sales and
determine which aspects of IT quality are critical to
marketing department, 21% were from ICT
organizations to help CIOs to device effective IS
department, 20% were HR department, 16% were
quality improvement strategies with which scarce
finance department and 19% were from other
resources can be allocated more effectively. Our
departments. We used simple random sampling
research explores the linkage between IS quality
method to select the participants and used structured
(system quality, information quality, service quality)
questionnaire to collect data from the respondents.
and organizational impact. Our results indicate that,
overall, IS quality dimensions have a significant 2.2 Data Analyzing
positive influence on organizational impact either
directly or indirectly (Narasimhaiah Gorla, Data analyzing is very important path of any
2010)[8].as well as in here they said system quality, research. After collecting the data, it should be
information quality and service quality impact analyzed and interpreted. The data analyzed depend
organisation performance. As stated in N.goral et al on nature of the sampling process, measurement and

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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-3, Issue-5, 2017
ISSN: 2454-1362, http://www.onlinejournal.in

data collecting method. To determine the objective of facilitate data analysis and report creation.it would
this research statistical procedures are conducted. have required a database translation to function
Sample data can be analyzed by using descriptive effectively. Dimensions for Efficiency are relevance,
statistical analyzes. In the descriptive analyze has
market efficiency and improved productivity. User
been included mean, standard deviation, variance
graphs and tables to discuss the finding. To test the Friendly dimensions are user friendly skills.
hypotheses and identify the whether there is a
relationship between service quality dimension and 3 Result
patient satisfaction. Statistical package for social
science (SPSS) will be used for the data analyze. It 3.1 The Legal Status of the respondent’s
helps to analyze data more effectively and firm
efficiently. SPSS is software which is used to All the respondents from privet limited company
measure accuracy of the data. and public limited company. The information on the
firm’s legal status is summarize.
2.3 Conceptual Framework
Table 1. The Legal status of respondents
Figure 1. Conceptual Framework
Frequency Percentage
Public Company 41.0 41.0
Independent Dependent
Variables Variable Private Company 59.0 59.0
Total 100 100
Reliability
3.2 The respondent’s Years of Service
Efficiency Business Majority of the respondents have worked for their
Performance company for more than five years. Only 33% of the
respondents have worked for their company for a
period not exceeding five years. This is an indication
User that most of the respondents have a thorough
Friendly understanding of their company.

Table 2. Respondent's Year of service

The reliability was ensured by testing the Frequency Percentage

instruments for the reliability of values in business Down to 5 33 33.0
performance. Dimension for Reliability are System 6-10 23 23.0
reliability, Understand ability and accuracy. The 11-15 27 27.0
strong expansion and consequent physical and Over 15 17 17
commercial growth of the organization opened up in Total 100 100
the organization’s business processes. Nicholls-
Nixon (2005) found in his study that rapid growth in
3.3 The gender of the respondents
business generates dramatic changes in the scale and
scope of a firm’s activities. According to her, 42% of the respondents were male while 58%
entrepreneurs in rapidly growing business enterprises were female. This implies that there was no gender
experience more difficulties in comparison to small biasness.
growth business when deciding or establishing the Table 3. Gender of the Respondents
type of changes or evolution required to support their
level of growth. The main problem area highlighted Frequency Percentage
by the associate was the Business accounting system. Male 42.0 42.0
Both business companies purchase to software Female 58.0 58.0
system for increase the business performance. The Total 100 100
software was supposed to be an accounting system
capable of managing all financial aspects of the 3.4 The respondent’s department
business and though it appeared to be a tool that can Table 4 shows that 24%, 21%, 20% and 16% of
be fully integrated with MS excel or access so as to the respondents were from Sales & Marketing

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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-3, Issue-5, 2017
ISSN: 2454-1362, http://www.onlinejournal.in

department, ICT department, HRM department and 3.6 Descriptive Analysis

finance department respectively. 19% of the Descriptive analysis is used for generating result
respondents were from other departments such as the is descriptive statistics. Descriptive statistics were
software modifying department. This shows that data calculated to identify the nature of the research
was collected from all the departments and therefore variables as follows. Mean value provides the idea
the information is reliable. about the central tendency of the values of a variable.
Table 4. Respondent's Departments Table 6. Descriptive Analysis

Frequency Percentage Variables Mean Std

Finance and 16 16.0 Deviation
administrator Business 3.26 .79502
ICT 21 21.0 Performance
HRM 20 20.0 Reliability 3.62 .83420
Sales and 24 24.0 Efficiency 3.48 .76735
marketing User Friendly 3.24 .99107
Other 19 19.0 The mean value and the value of standard
deviation of dependent variables have been shown.
Total 100 100.0
Mean value provides the idea about the central
tendency of the values of a variable. Number of
observation of each variable is 100.Mean value of
3.5 Reliability Test business performance was 3.2600while the value of
Reliability test was performed to identify the standard deviation is .79502. Mean value provides
reliability of each construct which was used to the idea about the central tendency of the values of a
measure the research variables. Reliability measure variable. The above table show mean value of
used standard method of cronbach ‟s alpha.
reliability was 3.6200; the value can be deviated by
Cronbach ‟s alpha is a reliability
.83420.In the abovecoefficient
table thethat
mean value of
indicates how well the items in a set are positively efficiency was 3.4800whereas, the value of standard
correlated to one another. Cronbach ‟s alpha is was .76735. Mean value provides the idea
deviation
computed in items of the average inter correlations about the central tendency of the values of a variable.
among the items measuring the concept. The closer In the above table the mean value of Ecommerce
cronbach ‟s alpha is towas
strategy 1, 3.4800whereas,
the higher the internal
the value of standard
consistency reliability. In this survey test the level of deviation was .73140. Mean value provides the idea
reliability used Questionnaire for determine internal about the central tendency of the values of a variable.
consistency. In the above table the mean value of User-friendly
was 3.2400whereas, the value of standard deviation
Table 5. Reliability Test
was .99107. Mean value provides the idea about the
Variables Num of Cronbach’s central tendency of the values of a variable. Mean
Items Alpha value of all selected variable were relatively high. It
indicates that the respondents are agreed with the
Reliability 3 0.621
statements. Respondents ‟ perception tow
Efficiency 3 0.715
performance was also comparatively high.
User 2 0.754
Friendly 3.7 Hypothesis Testing
Business 3 0.710
Hypothesis 1 (Software package in accounting
performance
information system which affect qualitative features
According to given table, 0.710 of Cronbach ‟s
of accounting information in organization population
Alpha is for variable of business performance and it
was chosen)
is greater than 0.7. It indicates the better internal Table 7. Hypothesis 1
consistency of each question which used to measure
the particular variable. Cronbach ‟s Alpha of Business Reliability
reliability, efficiency, Ecommerce strategy, and User Performance
friendly are .621, .715, .720, and .754, respectively. Business 1 .194**
All they are greater than 0.7 It means all the Performance
questions which are used to test quality of particular Efficiency .194** 1
variables have better internal uniformity. Finally, all **. Correlation is significant at the 0.01 level (2-
Cronbach ‟s Alpha values are greater than 0.7. It
tailed).
indicates all the questions are highly reliable to As shown in the table 4.12 correlations for the
analyze.

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Vol-3, Issue-5, 2017
ISSN: 2454-1362, http://www.onlinejournal.in

relationship between reliability and business 3.9 Multivariate Analysis

performance was 0.194 that indicates. That reliability Table 11. Multivariate Analysis
of service of performance affect to the business
performance. It was significant at 0.01 level. Mode Unstandardi Stand t sig
Therefore the result supports to the first hypothesis zed ardiz
of the study (H1). Coefficient ed
Hypothesis 2 (Software package and AIS affect Coeff
relevance feature of information of financial icient
statement) B Std Beta
Table 8. Hypothesis 2 Err
(constant) .662 .366 1.808 .074
Business Efficiency
Performance Reliability -.07 .081 -.083 -.974 .332
Business 1 .535** Efficiency .282 .104 .272 2.697 .008
Performance
User .231 .071 .288 3.258 .002
Efficiency .535** 1
Friendly
**. Correlation is significant at the 0.01 level (2-
tailed). a. Dependent Variable: business performance

The table shows that there is a 0.535 correlation The coefficient table shows that the beta value is -
coefficient which is higher than the significant level. 0.83 for reliability, 0.272 for reliability, and 0.306
Therefore, there is a strong positive relationship for Ecommerce strategy, 0.288 for User-friendly .
between Efficiency and the Business performance The meaning of that value is if the business
and it is significant. As a result of that, H2 is performance is increased by 1; -0.83reliability
accepted. variable, 0.272 from efficiency variable, 0.306 from
Hypothesis 4(Software package and AIS affect e commerce strategy variable, and 0.288 variable
reliability future of information of financial may affect to that change. The table further reveals
statement.) that e commerce strategy has the greater impact on
Table 9. Hypothesis 3 business performance as it was in the significant
level (0.00) and it has the highest beta value as
Business User Friendly shown in the table 0.306. Commerce strategy is the
Performance next mostly affected factor as it was also in the
Business 1 .482** significant level (0.00) and it has the highest beta
Performance value as shown in the table 0.306. User-friendly is
User-Friendly .482** 1 the next mostly affected factor as it was also in the
**. Correlation is significant at the 0.01 level (2- significant level, efficiency has 0.272 and reliability
tailed). has impact of -0.83 on the business performance.
The results show that there is a 0.482 of Further the regression equation has been developed
correlation coefficient between user-friendly and the as follow.
business performance. It is a positive performance
and it is significant. As well as it accepts H4. BP=ConstantValuereliability+efficiency+Ecomm
ercestrategy+User-friendly
3.8 Model summary of SQ
Table 10. Model Summary of SQ = 0.662-0.79x1 +.282x2+.332x3+.231x4 That
means, to make changes on business performance,
Model R R2 Adjusted Std reliability affect by -0.79, efficiency by 0.282, e
commerce strategy affect by 0.332, and user-friendly
R2 Error
affect by 0.231.
1 .664a .441 .418 .60662
a. Predictors: (Constant), User-friendly, reliability, 3.10 ANOVA Table
Ecommerce strategy, efficiency Table 12. ANOVA Table

In the model summery table the R value is 0.664. Model Sum of df Mea F Sig
The meaning of that is 66.4% of the service quality squares n
dimensions affect to the business performance. And Squ
also the table shows that R value as 0.441 and the are
meaning of that is 40.8% of the variation in the Regression 27.614 4 6.90 18.7 a
business performance is explained through the 4 6
.000
service quality.
Residual 34.959 95 .368

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Imperial Journal of Interdisciplinary Research (IJIR)
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Total 62.573 99 software. Journal of International Accounting,&

a. Predictors: (Constant), User-friendly, Taxation.
3. Andrew H Van de Ven, R. D. (1985). The
reliability, Ecommerce strategy, efficiency
concept of fit in contingency Theory. Resources
Organizational Behaviour.
b.Dependent Variable: business performance 4. Dr. Daw Hla, S. P. (2015). Efficiency of
Accounting Information System and
The table shows that the F test was 18.760 with Performance Measures. International Journal of
significance of 0.000.That shows the probability of Multidisciplinary and Current Research.
these results occurred by chance was less than 0.05. 5. EL Loudi, M. (1998). The relationship among
Therefore, the significant relationship between organisation structure, information technology
service quality and the business performance has and information processing in small Canadian
been presented through the above table. firms. Canadian Journal of Administrative
Science.
4 Conclusion
Accounting software systems are critical to the
production of quality accounting information on a
timely basis and the communication of that 6. Elena Urquía Grande, R. P. (2011). The impact
information to the decision makers. Existing of Accounting Information Systems (AIS) on
literature offers evidence of the relationship between performance measures: empirica evidence in
these Accounting Software System and business Spanish SMEsl . The International Journal of
performance; though it is important to highlight that Digital Accounting Research.
an in-depth study is required to examine other factors 7. Hitt, E. B. (2000). Beyond Computation:
that may influence this relationship. The service Information Technology, Organizational
Transformation and Business Performance.
quality dimension (User-friendly, reliability,
Journal of Economic Perspectives.
efficiency) impact to the business performance 8. Narasimhaiah Gorla, T. M. (2010).
66.4%.it is not affect to the 33.6% to business Organizational impact of system quality,
performance. This study showed that there is strong information quality,and service quality. Journal
relationship between accounting software system and of Strategic Information Systems.
business performance, which means access to 9. Nicolau, A. S. (2006). Organizational
accounting information, will lead to organizational performance effects of ERP systems usage: The
effectiveness. Therefore, it can be concluded that impact of post implementation change.
accounting information systems have an impact of International Journal of Accounting Information
Systems.
the business performance of the Anuradhapura city.
10. Noor Azizi Ismail, M. K. (2007). Factors
influencing the alignment of accounting
5 Recommendations for Further Study information systems in small and Medium size
Malyasian Manufacturing Firms. Journal of
Throughout working on this study, some Information Systems and Small Business.
suggestions concerning the expansion of the present 11. RH Chenhall, D. M. (1986). The Impact of
study have arisen. First, in terms of data collection, I Structure, Environment, and Interdependence on
would suggest to collect data from different sources. the Perceived Usefulness of Management
Accounting Systems. The Accounting Review.
Secondly, I would suggest similar studies to be done
12. Samuel, N. (2013). Impact of Accounting
in more business in order to compare the findings Information Systems On Organizational
with the findings of this study. Finally, a similar Effectiveness of Automobile Companies in
study could be carried out focusing on the Kenya.
effectiveness of accounting software systems in 13. Stuart burchell, C. C. (1980). THE ROLES OF
enhancing the business performance. Similarly, a ACCOUNTING IN ORGANIZATIONS AND
similar study could also be carried out focusing on SOCIETY. Accounting, Organizations and
factors influencing implementation of accounting Society.
software systems or even challenges faced during 14. Vahab Rostami, A. M. (2010). Usefulness of
Accounting Information System in Emerging
implementation of accounting software systems in
Economy:Empirical Evidence of Iran.
the business performance Anuradhapura city. International Journal of Economics and Finance.

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