Title: The Influence Of Modified Accounting Basis On The Financial Performance Of Small Enterprises In San Fernando, Pampanga
Authors: Cathlyne A. Magusib
Jhennelene Joyce G. Torres
Paula Joy O. Mallari
Czerney T. Manuyag
Tyra T. Cortez
Alan Y. Cabaluna
Ph.D.
Jason Y. Carreon
MBA
Volume: 10
Issue: 7
Pages: 220-235
Publication Date: 2026/07/28
Abstract:
This study examined the influence of the modified accounting basis on the financial performance of small enterprises in San Fernando, Pampanga as a middle ground between the costly accrual accounting and the cash basis which is preferred by businesses for its easier application. Primarily, the researchers evaluated the influence of modified accounting to factors of financial performance, namely profitability, liquidity, solvency, and operational efficiency. A quantitative research design was used on the structured survey instrument, which was validated by experts and assessed for reliability before distributing to small businesses. Regression and correlation analysis were used to examine the data from the respondents. The results showed significant positive relationship between financial performance and the modified accounting basis, and the aspect with the strongest association observed is operational efficiency component (r = 0.74). Thus, the study came to the conclusion that using a modified accounting basis significantly affects financial performance of businesses through improved financial monitoring, reporting accuracy, and decision-making. These results suggest that adoption of modified accounting basis can substantially improve a business' overall financial performance and sustainability.