Research proposal

group(7) members
1. Zekariyas H/mariyam 0043
2. Tesfahun Tekalign 0039
3. Betelhem Kasahun 0006
4. Eden Tadele 0056
5. Hawi Yadssa 0108

Title:
Assessing the effect of accounting practices in Mars food factory

Abstract
Over the past few decades, the researchers demonstrate consistent effort in investigating the
Manufacturing Enterprises. This sector plays a crucial role in the economic growth in both
developing and developed countries. The research investigated how accounting practices
influence the organizational performance in Mars food factory plc. Accounting practices consists
of record keeping, budgeting practices and payroll accounting whereas organizational
performance is measured by organizational goal achievement, organizational effectiveness and
organizational efficiency records. A structured questionnaire was used to collect the primary data
from 7 departments of a company which were selected by means of the random sampling
technique. The results revealed that among the accounting practices, only record keeping and
budgeting practices have significant positive influence on organizational performance of Mars
food factory plc. It can be recommended that decision makers and other bodies which are
responsible for the organization should organize training programs for those operators who do
not have the technical knowhow in the field of accounting to come to grips with it and also
provide some specific accounting guidelines and template forms for capturing accounting
practices for the operators to use.
 CHAPTER ONE
1. Introduction
1.1 background of the study
Accounting practices are crucial in the success of contemporary business organizations. It foils
the manipulation of assets, increases production and yield, controls expenses and helps to
improve the efficiency of the overall management. The role of management is vital in the whole
development of a business organization. Accounting is an essential tool for recording, analyzing,
monitoring and evaluating the financial status of the organizations. It provides a source of
information to owners and managers of organizations operating in any industry for measuring
financial performance. Today’s accounting system provides more appropriate, consistent and
suitable financial information to stakeholders to make the effective financial decisions
concerning their business entities. According to the business dictionary ‘Accounting’ can be
defined as a systematic procedure that helps to identify record, measure, classify, verify,
summarize, interpret, and communicate financial information. It reveals profit or loss for a
specific period, and the value and nature of an organization’s assets and liabilities and owner’s
equity. It involves ascertainment, recording, summarizing, and reporting of financial facts used
in evaluating and monitoring an organization’s economic undertakings. An accounting system,
therefore, is an organized discipline of manual and computerized accounting methodology,
processes, and wheels which are employed in gathering, recording, classifying, analyzing,
summarizing, interpreting, and presenting accurate and timely financial information for decision
making in an organization. In any sense, profit can analogously be viewed as the life-blood of a
business and hence the accounting bases, concepts and principles adopted ought to capture and
report all the relevant accounting information to ensure reliability in its measurement. The study
therefore mainly focuses on investigating the types of accounting practices followed by the
company, their completeness and the availability of accounting skills and knowledge to capture
and process accounting information which can be used to measure performance in Mars food
factory plc. The accounting practices such as the cost accounting practices, the financial
accounting practices and even the management accounting practices provide more information
on the performance and other useful material about the organization to the stakeholders. The
purpose of financial statements is to provide information about the financial position, financial
status, performance and changes in financial position of an organization that is valuable to
various users in making effective decisions. Similarly, accounting practices are the procedures
and controls that accounting departments use for creating and recording business transactions.
Accounting practice should ideally be extremely constant, since many business transactions must
be dealt with in exactly the same way in order to prepare consistently reliable financial
statements. There are few studies conducted on accounting practices and organizational
performance in manufacturing enterprises. These studies conducted have not shown that how all
components in accounting practices improve the overall organizational performance of
manufacturing company especially in Mars food factory plc. Therefore the study attempts to
examine the effect of accounting practices on organizational performance in Mars food factory
plc.
1.2 statement of the problem
One of the problems of company’s failure is poor management including accounting problem-
solving. Mars Food Factory face difficulties in increasing company’s capital from the existing
market and financial institutions. Even when the financial institutions and current market
approve to obtain company’s capital, the conditions are always dreadfully frightened. Therefore
there is insufficient resources available to company’s performance and thus lead to poor
production. Further, the issues experiencing organization is shortage of skillful management
which affects the ability of workers to employ the services of experts. The highest cost of
available raw materials influences the prices of finished goods. It only has adverse consequence
on the business of the company but also on the success. The availability of infrastructural
facilities is totally inadequate in the areas of access roads, electricity, water supply, etc. and
various policies and regulatory measurements such as exclusion of fuel subsidy, taxes, and
burdens on loans. The failure of Mars Food Factory is to find their counter funds obligations as a
condition of financial arrangements generates another obstacle for the company to acquire the
facilities offered in concessionary finances. However, inefficient record keeping practices,
incompetent use of accounting information to support the financial decision making and the low
quality and consistency of financial facts are main problems in financial management concerns
of Mars Food Factory. The place of sound accounting and internal control systems of any
enterprises, regardless of its scale, cannot be overstated. A vast majority of Mars Food Factory
cannot afford the complication of a detailed accounting system even if they would have. Hence,
the existence of single entry in books and in some cases incomplete records. Based on the
problem, the following research question is formulated, to what extent accounting practices
influence the organizational performance in Mars Food Factory?
1.3 Objective of the study
1.3.1 General objective of the study
Accounting information is fruitful in important activities as: the evaluation of position of
enterprises in terms liquidity, profitability, leverage and activities; measurement of performance;
and assessment of the effectiveness of alternative courses of action. The objective is to
investigate the impact of accounting practices on organizational performance in Mars food
factory plc.
1.3.2 Specific objective of the study
This investigation aims to identify how the company measure and record economic events of
business, to assess recording, analyzing, monitoring and evaluating the financial status of the
organization, to investigate company’s performance, to examine overall accounting practice and
to evaluate the efficiency of Mars food factory plc.
1.4 Significance of the study
This research assesses the accounting practice of mars food factory. After completion of this
research the company and different stakeholder would get significances. The significances
includes:
  To know to what extent accounting practices influence the company’s performance
 For better management including accounting problem-solving
 For increasing company’s profit and capital
 To afford the complication of a detailed accounting system
 To become better than competitors
 For better compensation of government tax and other liability loans for government
1.5 Scope of the study
The study would cover as much as possible all accounting practice which is focused on Mars
food factory PLC. This research paper is specifically designed to assess the accounting practice
of the company. Due to limitation of time and resources, the student research has intended to
limit the scope of the study to be based on the some population of the company.
1.6 limitation of the study
Study limitation affects the overall research procedure. There are some factors that affect this
research thesis. The expected limiting factors of this research proposal are:
 Low access to get primary sources
 Time line which provided for completing research thesis is so much short
 Transportation costs and other costs for completing the research was difficult
 Low contribution between some group members
 Get individuals permission for questioners was tough
1.7 Organization of the proposal
Accounting practices consists of record keeping, budgeting practices and payroll accounting
whereas organizational performance is measured by organizational goal achievement,
organizational effectiveness and organizational efficiency records.The objective of this research
is to investigate the impact of accounting practices on organizational performance in Mars food
factory plc.
 CHAPTER TWO
2. Literature review
2.1 Introduction
The thesis seeks to investigate the accounting practice in the organization of Mars Food Factory.
Therefore the thesis starts with an overview of management accounting, in order to provide an
outline of its development and to highlight its importance for management and company
businesses. The chapter first reviews the history of accounting practice before examining the role
play in the modern business environment and developments in definitions of management
accounting. The chapter ends with a discussion focusing on the factors that challenges the
company’s performance by assessing the accounting practice.
2.2 Theoretical Reviews
A well-structured literature review is characterized by a logical flow of ideas, current and
relevant references with consistent and appropriate referencing style; proper use of terminology,
and an unbiased and comprehensive view of the previous research regarding to research
topic.Critically this research team observes possible points of a research problem on accounting
practices. That is assessing the accounting cycle, the system that used for costing merchandize
inventories, evaluating performance of internal control over cash, the method that used by the
company of cash flowsin Mars Food Factory.
2.3 Empirical Reviews
There have been some studies that link between accounting practices and organizations
performance. For instance, Onaolapo&Adegbite (2014) investigate the impact of accounting
records on SMEs’ business performance. The primary data were gathered by using interviews
and questionnaires from sample of 113 SMEs using a mixture of stratified and purposive
sampling techniques. Descriptive statistics, Chi-square and ANOVA were employed for
analyzing the data. The results revealed that accounting records keeping has a strong positive
relationship with SMEs’ performance.
Yousef (2013) conducts a study on the use of accounting information by organizations in the
south district of Jordan. Data were systematically gathered using a list of questions from a
sample of 136 SMEs. The study shows that the level of awareness on the significance of
financial management and accounting information is still very low among SMEs in the south
district of Jordan.
Amaoko (2013) studied the accounting system of Manufacturing companies in the Kumasi
metropolis of Ghana. The study was based on primary data collected through structured
questionnaires from a sample of 210 Manufacturing companies. The study found that majority of
Manufacturing companies fail to keep proper accounting records as they feel that it is not
necessary; it exposes their financial position; it is time consuming; and expensive. This study
reaches the same conclusion with the study of Yousef (2013) “that the level of awareness among
Manufacturing companies on the importance of proper accounting record keeping is still very
low.”
Ohachosim et al. (2012) carried out the study of “Financial Challenges of Small and Medium-
Sized Enterprises (SMEs) In Nigeria: The Relevance of Accounting Information” from a survey
of 348 SMEs in Anambra State. Structured questionnaire were used in data collection. Analysis
was by means of ordinary least square (OLS). They found out that poor accounting system is
what characterizes most SMEs of Nigeria.
Tzempelikos&Gounaris (2015) ascertain few key account management practices at the strategic,
organizational, and tactical levels of management and offer support for greatest hypothesized
relationships, presenting that the recognized practices positively influence performance and
dyadic results through the mediation coming from the variables examined. The study extends to
understanding of the factors underlying effective Key account management practices based on
theoretical perspective.
2.4 Summary of Literature Review
Many researchers conducted the studies about accounting practices with different study problems
such as; management issues, accounting issues and financial issues and challenges, reasons of
company’s failures. Few researchers examined about the contribution of record keeping practices
to business performance of organizations. They have pointed out that, some organizations
produce accounting records based on computerized accounting packages, relying on accountants
but often they left the complexity of information, accounting records hinder application of
appropriate measures in evaluating business success. Therefore this study attempts to fill this
gap.

CHAPTER 3
3. Methodology of the study
3.1 introduction
The methodology is the effective way to achieve the purpose of the study, develop the
conceptual framework and explains independent and dependent variables used and
operationalization of concepts and variables. Furthermore it discusses the technique adopted for
sample selection and data extraction.
Determining the population of Mars Food Factory is determinate. Thus there is unified database
available representing wide range of areas that the companyis operating like manufacturing and
selling of products. There are 144 departments and 250 employees in Mars Food Factory. The
primary data were collected from 25 individuals which were selected by using random sampling
technique. 150 questionnaires were issued.
Primary data was obtained from the selected individuals through structured questionnaires. The
questionnaire consists of two sections: Section A and Section B. Section A consists of the
questions related to personal information of respondents for the research and section B evaluate
the degree of the agreement with the impacts of accounting practices on organizational
performance. The respondents were requested to indicate the extent of their agreement with a
series of questions.
3.2 Description of the study area
Describing our study area is necessary for creating a better knowledge for readers. Our student
research team’s study company which is Mars Food Factory head office is located in Alemgena
that is the neighborhood of Oxford plc. It has engaged in manufacturing of different kinds of
foods and sale to its customers.
3.3 Research Design
Research design refers to the overall strategy that researcher choose to integrate the different
components of the study in a coherent and logical way, ensuring researcher will effectively
address the research problem. A descriptive method is used to state the purpose of the study
where accomplish through the data collected from secondary and primary source. Research
approaches are plans and the procedures for research that span the steps from broad assumptions
to detailed methods of data collection, analysis and interpretation. After information was
gathered through the employed methods, the clarification and analyzing will be done through
both quantitatively and qualitatively. The data will be presented and analyzed by using different
tools such as tables and percentages.

3.4 Data Type, Source and Methods of Collection

3.4.1 Data Type
Data collection requires conducting certain procedure for further analysis. In this research, two
main types of data will be used to gather information, namely; Primary and secondary data. We
prefer primary data type because it is more reliable these data are first time collected in solving
specific problems under study. Primary data will be gathered using, questionnaires, interviews
and observation for the purpose of the study and we were used secondary data type that are
already in existence and have been collected previously for different purposes. Therefore,
secondary data for this study will be gathered through organization documents, journals, books
and other sources concerning Cost accounting practice.
3.4.2 Source of data
Primary source: is more used source in this thesis. It is more reliable and accurate source.
Secondary source: is also our second choice for data source in case of difficulty of getting some
primary data sources.
3.4.3 Method of Data Collection
Method of data collection is collection of data through observation, direct communication with
respondent in one form or another or personal interview. The data gathering methods will be
interview with respective managers, questionnaire and observations.
Interview: This method of data collection is preferably used because it increases the precision of
the data gathered. This is because the unstructured conversation usually makes the researcher and
the respondent to be friendly and hence, willing to express their views on the research problem
under study. The top managers are selected for interview because, they are small in number and
their position is important in describing the practice and problems of performance appraisal in
the company. In addition to that they knew the strength, challenges, weaknesses and
opportunities of the Company.
Questionnaires: These are structured questions prepared to as to be distributed to particular
person in order to enable person to answer those questions which are found from questionnaires,
and at the end those questionnaires will be collected by the researcher in order to analyze the
data collected.
Observation: This method of data collection includes physical presence and full participation in
the company activities. Through this instrument the researcher concentrated in observing the
employees in performing their duties, the way they are working and how they practice the
costing system.
3.5 Population and Sample Design
The focus of the research is on the professional employees and this was done to the
administration of the study. Though not a strong stance, the respondents are selected because
they can easily understand and give valid responses to the question provided, as compared to the
illiterate. If the targeted respondents are illiterate which have not information and knowledge
about the subject matter, the study will be forced to be conducted through interview which is
time consuming and very difficult to achieve within the given short period of time. Hence, the
student researcher has limited his attention on the professional respondents.
3.6 Methods of Data Analysis
Analyzing a data is a major function in this section. This research designed as descriptive method
so that the data collected is analyzed in different ways but in a coherent whole. Hence data
collected via interview is presented in a narrative form and discussed in a narrative way
qualitatively. The quantitative data collected via the questionnaires and then using descriptive
statistics frequency and percentages will be generated and analyzed.
4. Budgeted Cost and Time Schedule
4.1 budgeted Cost

4.2 Time Schedule

Reference

Onaolapo & Adegbite (2014) investigate the impact of accounting records on SMEs’ business
performance.
Yousef (2013) conducts a study on the use of accounting information by organizations in the
south district of Jordan.
Tzempelikos&Gounaris (2015) ascertain few key account management practices at the strategic,
organizational.
Ohachosim et al. (2012) carried out the study of “Financial Challenges of Small and Medium-
Sized Enterprises (SMEs) In Nigeria.
Amaoko (2013) studied the accounting system of Manufacturing companies in the Kumasi
metropolis of Ghana.

Appendix
RIFT VALLEY UNIVERSITYCOLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING & FINANCE
Dear Respondent The purpose of this study is to assess The Accounting Practice, a Case Study of
Mars Food Factory PLC in Ethiopia. The success of the study is highly dependent on your
valuable response for the question raised. Therefore, you are kindly requested to give your
response for each question raised related to the use of accounting practice in your company. The
participation is fully voluntary and responses will be treated confidentially. The results will be
used for academic purposes and identity of the respondents will not be disclosed in any manner. I
would appreciate your positive consideration in completing the enclosed questionnaire and
assisting me in our research efforts.

SECTION A: BIOGRAPHICAL DATA

Instructions:
Please provide the following information by making a “tick mark” in the appropriate block
where the options are provided.
1. Please indicate your gender
Male
Female
2. Please indicate your age group (in years):

20 – 29 30 – 39 40 – 49 50 and above
3. Please indicate your highest education qualification level
General education
12th grade complete
Diploma

Bachelor Degree
Master Degree and Above

4. Your work Experience in this organization (in years)

Below 5 years 5 to 10 10-15 above 15
5. In what position are you working in your company? ______________________

SECTION B: QUESTION UNDER RESEARCH

The following are questions about the cost accounting department.
6. Does the company have a separate cost accounting department?

Yes No I don’t know

7. If your answer is yes for question six does it has adequate staff members?

Yes No I don’t know

8. If the department has adequate staff members in number, are they efficient?

Yes No I don’t know

9. Are the cost accounting staff members professionally qualified in accounting?

YesNo I don’t know

10. Do you think such employees have sufficient knowledge and skill for their job
responsibility?

Yes No I don’t know

11. Do you think this staff is discharging its responsibility?
Yes No I don’t know
12. If your answer is no for question 6; is there other party who records cost data?

YesNo I don’t know

13. Do you think this responsible party can discharge its responsibility properly?

Yes No I don’t know

Thank you for taking the time to complete this questionnaire. Your assistant in providing this
information is very much appreciated.