According to Leigh (2022), is crucial in business since it helps control spending, find

growth prospects, and ensure tax responsibilities. Small firms frequently collapse when their

cash flow runs out, so it's critical to develop effective record-keeping rules and a good financial

strategy. Accurate bookkeeping entails arranging financial transactions, such as sales,

expenses, assets, and obligations. Professional accounting systems assist small business

owners to plan for the future while meeting regulatory requirements.

According to Tarawade (2021), managing a company's finances using simple accounting

strategies is crucial for its growth. Mastering finances from the start is essential for small

businesses worldwide. A well-planned and implemented accounting strategy is crucial for

constant growth. Business owners must track revenues, expenditures, and profits systematically

from the start of their business. To avoid issues like improper taxation or chaotic bookkeeping,

small businesses should plan their accounting strategy well in advance. To achieve their

business goals, it is essential to separate business and personal expenses, maintain a separate

account for business-related finances, and avoid making personal payments via the business

account. Hiring an experienced accountant is crucial for well-maintained business finances and

accounting, as they can help calculate money, track expenses, and design a feasible financial

plan. Additionally, using appropriate accounting software, tracking business cash flow, and

backing up account records are essential for a successful business. Remember, the success of

your business depends on accurate financial management strategies.

("Basic Accounting for Small Businesses Owners," 2022), providing a clear view of how

your funds are being utilized, bookkeeping allows you to monitor the flow of money in and out of

your business. This enables you to distinguish between expenses related to your business and

payments towards loans or credit cards. Additionally, it offers a simple method for monitoring the

growth of your company in terms of sales.

8
 ("Accounting for Small Businesses in the Philippines: 5 Key Considerations," 2021)

outline five essential factors that small business proprietors should take into account in the

realm of accounting, especially if they aim to expand their business down the road.

For small businesses, these five crucial accounting tips are key: separate business and

personal finances, update records monthly, understand tax basics, establish a budget, and

implement an efficient accounting cycle, Hilario (2022).

Dela Cruz (2019), emphasizes the significance of excellent cash flow management in

the success and survival of small business finances. Regularly recording transactions and

identifying expenditure and profit allocations aids in the prevention of budget deficits and the

continuity of vital business processes. Regular financial updates assist in determining the

company's strategy. Invoicing clients as soon as possible after finishing deliveries is also

recommended, as it provides for speedier cash flow and better receivables turnaround. Regular

financial status updates can assist in identifying possible concerns and ensuring the smooth

operation of the organization.

According to Campos (2020), the importance of professional assistance in managing

financial resources for small businesses. General accounting involves basic activities to

maintain the accuracy and integrity of financial records, while bookkeeping involves recording

daily transactions. These services include payroll, compliance, tax preparation, payment

proposals, bank reconciliations, and monthly reports. Proper implementation results in well-

organized financial records, allowing for cash flow tracking and preventing future issues.

Management accounting collects, analyzes, and interprets financial data to help key decision-

makers. For businesses growing or scaling up, a management accounting service can help

achieve business goals within budget constraints.

9
Review of Related Studies

Amoako (2013), analyze the record keeping practices used by SMEs in Kumasi

(Ghana). The majority of SMEs fail to keep thorough accounting records because they believe it

is unnecessary and exposes their financial condition, Amoako (2013). The study of Amoako

(2013) is similar on the study in a way that both of the study used questionnaire as a data

gathering method, and that they both provide insights and recommendations for improving

accounting practices in small business. They are different in terms of geographical scope of

research, and the focus on specific scope of accounting practices and challenges of SME’s.

Abdul-Rahamon and Adejare (2014), studies the influence of accounting records

keeping on small scale firms. Abdul-Rahamon and Adejare (2014) concludes that there is a

strong positive connection between accounting records keeping and small-scale enterprise

performance. Accounting records are required for decision making, which unavoidably affects

the operation of small businesses, Abdul-Rahamon and Adejare (2014). This research is similar

to the study for they both focused on small businesses, both looked into the accounting and

financial aspects of small businesses. Furthermore, they both used questionnaire for data

gathering and explore the impacts of related accounting factors on the performance of small

businesses. They are different on the focused scope of research. In addition, the study of Abdul-

Rahamon and Adejare can be applied broadly while this research findings are specific to Gubat

Sorsogon.

Pham and Phi (2020), explore the elements influencing accounting policy decisions in

Vietnam's small and medium-sized businesses (SMEs). The size of the company has a major

impact on the choice of accounting policies in SMEs, Pham and Phi (2020). Pham and Phi

(2020), offer instructive recommends regulators and lawmakers to improve accounting policy

decisions in SME’s. The studies both address challenges faced by small businesses, and

explore the effects of accounting strategies and policies on the overall success of small

10
businesses. Moreover, they both used questionnaire as data gathering method. The studies

have differences based on the scope of geographical location, the research focus of the study

and the objectives.

Akande (2011) investigates the impact of accounting knowledge on entrepreneur

performance for small business success in Nigeria. Accounting skill was discovered to be a

contributory factor to entrepreneurial performance; as a result, owner entrepreneurs are advised

to embark on capacity building in accounting skill in the areas of financial management and

record keeping, while the government makes financial statement preparation for performance

monitoring mandatory for small business owners, Akande (2011). The study contains

similarities, particularly on their implications for decision making, and they are both related to

accounting practices and strategies of small businesses. Akande’s research is different on the

geographical focus of the study and the concentrate on the role of accounting skills, while the

research analyzes various accounting strategies employed by small businesses.

Karadag (2015) examines the fundamental role of financial management in Turkish

SMEs and identifies financial management difficulties and practices that influence organizational

performance. Despite the fact that many small business owners have minimal knowledge of

accounting and finance, many of them do not hire professionals, Karadag (2015). Because

some small business owners do not make educated financial decisions, insufficient financial

knowledge has a detrimental impact on financial planning and record keeping (Karadag, 2015).

The studies are similar in terms of their concerned with small businesses, their importance for

the success of the business, and their impact on the performance businesses. The studies have

differences in terms of their geographical scope, and that Karadag’s study focus on challenges

related to financial management while, this research specifically focus on accounting strategies.

Ibarra and Velasco (2015) investigate the accounting knowledge, procedures, and

controls of MSMEs in Metro Manila and numerous municipalities in Quezon Province. Ibarra

and Velasco (2015), analyze whether MSMEs comprehend accounting principles and have

11
appropriate accounting processes and controls. The vast majority of MSMEs are either

extremely competent or well-versed in accounting principles and ideas. MSMEs commonly

employ cash, accrual, and installment accounting methods. MSMEs employ common

accounting techniques in their bad debt estimation, depreciation method, net receivable

estimation, company documents used, and payment methods. MSMEs apply basic accounting

controls, although computers are rarely used, according to Ibarra and Velasco (2015). Both

studies share a focus on small businesses, explore accounting practices and strategies, and

investigate the challenges faced by small businesses. The studies are significant in terms of

specific geographical scope of the study, their objectives and the research focus of the study.

Legaspi (2018) describes the managerial use of management accounting information in

developing countries by providing a more detailed description of the SMEs' demographic profile,

the level of usefulness, and understanding of the function of each management accounting

practice undertaken. Legaspi (2018), in today's economic environment, firms require more

assistance from accountants as a business partner. Small businesses were more appreciative

of the use of cash flow analysis and operating budgets, whereas medium businesses valued

financial budgets, capital budgeting decisions, customer relationship management, and

operating budgets. Because of the nature and complexity of their operations, medium-sized

businesses should have used more instruments. Overall, small and medium-sized

manufacturing businesses understand the cost-benefit analysis of applying each instrument for

organizational tasks. As a result, the appropriateness of management accounting information is

determined by the organization's resources, operating activities, strategies, and size, Legaspi

(2018). The studies both involve an examination of accounting related practices, both indirectly

relate their research to business performance, both involve small businesses and uses the

same data collection method. Ibarra and Velasco’s study examines the effectiveness of

managing accounting practices and is more of a specific scope related management accounting

information. However, this research study is more concerned on analyzing various accounting

12
strategies employed by small businesses and investigates broader scope related to various

accounting strategies.

Baldovino et al. (2023), the study investigated the effect of accounting procedures and

accounting controls on company performance on Micro-, Small-, and Medium-Scale Enterprises

(MSMEs). According to the findings, a firm's accounting processes have a considerable impact

on both financial and non-financial indicators of business performance. Furthermore, the study

found that a firm's accounting controls have a major effect on both financial and non-financial

indicators of company success, Baldovino et al. (2023). The research study both involve small

businesses and focuses on accounting strategy used by small businesses. Baldovino’s study

has a specific scope related to the effect of accounting practices and controls on the business

performance of MSME’s. While this study has a broader scope related to analyzing a range of

accounting strategies employed by small businesses.

Crescini et al. (2016) used a descriptive method to address the factors that contribute to

the successful adoption of AIS in Philippine SMEs. The results focus on user satisfaction,

perceived monitoring effectiveness, AIS integration, information interdependence, organizational

formalization, and interorganizational dependence. Furthermore, Crescini et al. (2016)

emphasizes four factors that contribute the most to the effectiveness and apparent success of

AIS implementation in Philippine SMEs. Both studies have a common focus on small

businesses, and are related to financial management practices within small businesses. The

research of Crescini et al. is different in terms of aims, and the specific scope related to the

successful adoption of accounting information systems. However, this research is different for it

has a broader scope as it covers various accounting strategies and practices used by small

businesses.

Brila and Catapang (2020) investigated the use of Accounting Information System (AIS)

towards Small-Medium Enterprises (SMEs) in the food and beverage industry in San Pablo City,

Laguna. According to the statistics, the preferred AIS in their business was either programmable

13
excel or point of sale. When it comes to the effectiveness of AIS in business operations for

bookkeeping, AIS is most useful for all aspects of the business system. In addition, the value of

AIS in company processes for security is defined as the use of passwords. The most widely

used aspect of AIS is to keep files or data safe. Furthermore, the findings suggest that there is a

strong association between AIS and bookkeeping, but no relationship at all between AIS and

accounting. Moreover, the Accounting Information System (AIS) usefulness for businesses in

terms of BIR compliance proved to be most helpful for computing for VAT sales deductions, and

the use of the AIS system will lessen human error and will automatically show the deductions

whenever a transaction is completed, which is beneficial not only for the business but also for

the consumers, Brila and Catapang (2020). Both studies involve an investigation of accounting

practices and are localized within the Philippines and focused on small businesses. Brila and

Catapang’s study focuses on the utilization of accounting information system within SME’s food

industry, and examines specific accounting information system and their implementation while,

this researcher study analyzes various accounting strategies employed by small businesses,

and encompasses a wide range of accounting practices beyond accounting systems.

Synthesis of the State-of-the-Art

Accounting is the backbone of a company's financial management. It allows businesses

to effectively monitor their finances, evaluate their performance, and make well-informed

decisions based on historical financial data. In addition, accounting plays a crucial role in

controlling expenses, identifying avenues for growth, and fulfilling tax obligations. It also helps

establish robust record-keeping practices and develop effective financial strategies.

A small business needs a financial analyst to produce reports, evaluate data, and put

together monthly financial statements. In this position, entrepreneurs will analyze historical data

and combine historical and operational data. Owners will also compare actual results to

14
budgets. Better financial management and planning have a beneficial effect on financial health

scores, according to the Federal Reserve. Automating accounting procedures makes accurate

data easily accessible, allowing for well-informed corporate decisions. To maximize their tax

return, small businesses should carefully assess their accounting software alternatives and

whether to handle finances internally or employ an outside accounting staff. For small

enterprises, professional support in managing financial resources is essential. Furthermore,

maintaining correct records and meeting business objectives within budgetary limits, general

accounting, bookkeeping, payroll, compliance, tax preparation, and monthly reporting are all

crucial.

Small businesses need bookkeeping because it enables them to accurately monitor their

cash flow, distinguish between operating costs and loan payments, and measure sales growth.

This gives entrepreneurs a precise understanding of their total financial situation. The value of

good cash flow is important, businesses can avoid budget deficits and guarantee the continuity

of their operations by consistently recording financial transactions, identifying expenses and

profit allocations, and keeping up with financial information. Additionally, lowering payment

processing times and enhancing cash flow are both greatly aided by immediately billing

consumers.

The article asses that it is important to employ straightforward accounting procedures for

business expansion, particularly for small firms. Businesses must rigorously prepare their

accounting approach in advance, separate personal and company costs, and retain the services

of qualified accountants to avoid issues like erroneous taxation or chaotic bookkeeping. The use

of appropriate accounting software, keeping track of cash flow, and routinely backing up

account records are all crucial components in guaranteeing a business's success.

For Filipino small business owners, particularly those aiming to grow their operations,

the article presents five crucial accounting issues. Keeping separate business and personal

money, updating records on a regular basis, comprehending the basics of taxes, creating a

15
budget, and putting in place an effective accounting cycle are the five most important

accounting advice for small businesses.

The study investigates the influence of accounting expertise on the success of small

businesses. It emphasizes the significance of strong skills in performance monitoring and

explores the various accounting techniques employed by small firms. Additionally, the study

delves into the accounting practices and knowledge of MSMEs, revealing their predominant use

of cash, accrual, and installment accounting techniques, as well as their adoption of standard

methodologies for estimating debts. Furthermore, the study focuses on the impact of accounting

practices and controls on the performance of Micro, Small, and Medium-Sized Enterprises

(MSMEs), with a particular emphasis on small enterprises and their accounting strategies.

The research in Kumasi, Ghana, reveals that most SMEs in the region lack complete

accounting records due to perceived unnecessariness. The related study established a strong

correlation between small-scale firm success and maintaining accounting records, which are

crucial for decision-making and operations. Additionally, related studies that analyze the

accounting policy choices of SMEs in Vietnam, emphasize the influence of firm size. They

propose the use of questionnaires by lawmakers and regulators to address related issues and

improve practices.

Related studies explore management accounting data usage in emerging nations,

emphasizing accountants' role as business partners, highlighting medium and small firms' value

of financial budgets and cash flow analysis. The study that investigates the Accounting

Information Systems (AIS) in San Pablo City, Laguna, found a significant correlation between

AIS and bookkeeping, particularly for data protection, security, and BIR compliance. AIS also

helps minimize human error and automatically displays deductions when transactions are

completed. Moreover, other study examined factors affecting the adoption of accounting

information systems (AIS) in Philippine SMEs, including user satisfaction, monitoring efficacy,

16
integration, information dependency, organizational formalization, and interorganizational

dependence.

In Karadag's study, the role of financial management in Turkish SMEs is examined. The

study highlights the difficulties and practices that affect organizational performance. One

significant finding is that many small business owners lack knowledge in accounting and

finance, which in turn leads to insufficient financial knowledge impacting financial planning and

record keeping. It is worth noting that while both studies focus on small businesses, Karadag's

study specifically delves into financial management challenges, whereas this research

specifically focuses on accounting strategies.

Gap Bridge by the Study

Before this study, there has no specific research conducted to determine the accounting

strategies of small business owner in Gubat, Sorsogon. However there have been numerous

studies conducted locally and internationally that provides valuable insight into accounting

practices and financial management for small businesses. The existing studies are primarily

focused on the general accounting principles, the importance of accounting knowledge, and the

impact of applying correct accounting procedures on small to medium-sized enterprises which is

the broader context of the study. There is lack of research that tackle into the challenges and

practices that are carried by small business owners in Gubat, Sorsogon. This is the gap that the

study desire to bridge by providing an analysis of the accounting strategies employed by local

small business owners. It includes the specific challenges they face and how these strategies

influence the financial performance of the business in Gubat, Sorsogon.

Conceptual Framework

17
 The framework behind the study involves the process of using survey-questionnaire as a

data collection method to determine the most efficient and effective accounting strategies used

by small business owners throughout Gubat, Sorsogon. The effectiveness of these strategies

will depend on the various factors including how long have their business been established, the

type of their business, and the products that they offer. Furthermore, it also involves

investigating the current accounting strategies used by small businesses, the challenges that

they faced, it’s impact on their business, the extent of them seeking accounting assistance, and

its effects on the business performance.

Conceptual Paradigm

INPUT PROCESS OUTPUT

 General information of  Survey-  Accounting

small businesses: questionnare Strategies used by
a. How long have Small Businesses in
been they in Gubat, Sorsogon
business?
b. Type of business
c. Products that they
sell
 Accounting strategies
used by owners
a. Current Accounting
Strategies
b. Challenges faced
c. Impact of
challenges
d. Extent on seeking
accounting
assistance
e. Effects on the
business

Figure 1: Conceptual Paradigm

18
 Figure 1 illustrates the conceptual paradigm of Accounting Strategies used by Small

Business Owners in Gubat, Sorsogon with the input, process and output of this study clearly

illustrated. The input represents the questions that the researchers wanted to answer about the

Accounting Strategies used by Small Business Owners when it comes to the general

information of the small business owners and the accounting strategies that they use. As shown

in the model, the input indicates the study’s problem, on which the researchers based their

problem statement. The following stage is the process, which consists of the steps on how the

researchers will absorb in order to seek out solutions or answers to the matter, primarily through

a survey-questionnaire. Finally, the output depicts what the researchers want to achieve which

is to determine the accounting strategies used by small business owners in Gubat, Sorsogon

based on what is stated in their statement of the problem.

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