CHAPTER I

THE PROBLEM AND ITS BACKGROUND

INTRODUCTION

The major objective of accounting education is to prepare students for work places. For

many year’s academics (Accounting Education Change Commission 1990b; Albrecht & Sack

2000) and professionals (Andersen 1989) are seeking to restructure accounting education to meet

the requirements of business environment. However, currently accounting education as a model

has failed to focus on developing graduates for successful careers worldwide (Awayiga, Onumah

& Tsamenyi 2010). Whereas, accounting education should enable students to possess the

necessary skills for work place. It seems that accounting literature still has debates for what

necessary skills the graduates should possess and how can these skills be delivered to them.

While technical accounting competencies remain obligatory for the professional

accountant, these competencies alone are insufficient in today’s workplace. A study by Rebele

(1985) found that accounting students are inclined to rank technical accounting competencies

and oral communication skills higher than other skills. However, recent studies indicate that

development of student’s generic skills is required for career success. For example, Hurt (2007)

emphasized fundamental skills rather than a technical orientation. He advocated that the

development of critical thinking skills in future accountants is of primary importance. Schmidt,

Green and Madison (2009) surveyed 122 accounting administrators from North American

institutions with the largest enrolments in accountancy programs. Their results showed that

communication skill especially writing skill are considered important and most valued in the

accounting curriculum. Kavanagh et al (2009) emphasize the ability to really listen to and

understand clients’ needs as an essential communication skill. Accounting practitioners are no

bookkeeping and data analysis rather they are regarded as information facilitators. This has

resulted in the need for future accountants to be forward thinkers, skilled strategists and team

players (Jones, G. & Abraham 2008).

Accounting literacy is defined as the ability of an individual to make informed judgments

and to take effective decisions regarding the use and management of money (ASIC: 2003,

Noctor, Stoney and Stradling: 1992). According to Anthes, 2004 accounting literacy is the ability

to read, analyze, manage and communicate about the personal financial conditions that affect

material well-being.

Huston (2010) points out that there is no universally accepted definition of financial

literacy but describes accounting literacy as measuring how well an individual can understand

and use personal finance-related information. The researchers point out that accounting literacy

includes the ability and confidence of an individual to use his/her financial knowledge to make

financial decisions. Entrepreneurs who have the skill and competence may be able to apply this

knowledge and skills in their business. It is of this view that the work is being carried out to

ascertain how such skill and knowledge can impact on their performance.

Accounting literacy also reduces the risk of business failures caused by poor financial

management (Berryman, 1983). According to a World Bank Report; (1989) and emphasized by

Kauda; (1990) in the journal of management studies, the problems facing entrepreneurs is not so

much lack of funds, but it is the inability to properly manage financial, material and human

resources efficiently. Theodore and Armstrong; (1964), in a report on Development of African

Private Enterprises (DAPE), noted that the attitude of management of most private enterprises
affects the management of financial resources. It is obvious that accounting literacy can lead to

more effective use of financial products and services. It is therefore important for SMEs

operators to attend financial counselling programs which will enable them make better decisions

and gain the ability to properly manage financial, material and human resources efficiently. The

researchers also assert that levels of education often influence SME’s entrepreneurial ambition;

as education improves their financial management particularly credit management and cash flow

management (Berryman, 1983).

Accountants need intellectual skills such as problem solving and critical thinking.

Intellectual skills include the ability to relate concepts learned to new situations, the ability to

think for oneself, to critically assess new information and situations, and to apply knowledge

from one workplace context or problem to another. Kavanagh et al. (2009) defined problem

solving as the ability to apply theory to practice, as well as critical analysis and thinking skills.

Mohamed and Lashine (2003) defined critical thinking as the ability to reach justifiable

conclusions to questions that cannot be answered definitively and where all relevant information

may not be available. Intellectual skills help accountants to exercise judgment based on

comprehension of an unfocused set of facts and display a capability for inductive thought process

and apply value based reasoning in unfamiliar settings (Awayiga, Onumah & Tsamenyi 2010).

However, according to Sheffield Hallam University Research Archive (2005); techniques

for the development of accounting literacy are well documented in the educational literature.

However, what has been less extensively researched is the existence and impact of barriers to the

development of vocational skills. Potential barriers are communication apprehension (CA) which

can be divided into oral communication apprehension (OCA) and written communication
apprehension (WCA) and math anxiety (MA). This study attempts to measure and contrast the

accounting literacy of the new accounting and business students.

CONCEPTUAL FRAMEWORK

The framework presented the variables with regards to the accounting literacy of the

respondents. The benefits and difficulties surrounding the flow of the study were based on the

perception of the students on the subject matter. The level of the accounting literacy of students

was determined using their final grade in the subject FABM1. School and curriculum factors

were situated in the middle that acted as the barriers in acquiring accounting skills and

knowledge. These factors were also the main focus of our study. Finally, all of the said variables

ended up as important areas to achieve a high or low accounting literacy.

STATEMENT OF THE PROBLEM

ABM Students of Nova Schola Tanauan A.Y. 2018 – 2019.

Specifically, this study sought to answer the following questions:

1. What is the level of accounting literacy of grade 12 ABM students in this area:

a. FABM 1

2. What is the perception of ABM students in accounting in terms of its difficulties?

3. What are the barriers hindering the acquisition of accounting skills of the respondents in terms

of:

a. School factor

b. Curriculum Factor

4. How significant is accounting literacy to the grade 12 ABM students in terms of its benefits?

5. Based on the findings of the study, what course of action may be proposed to enhance the

accounting literacy of grade 12 ABM students?

RESEARCH HYPOTHESIS

Ho: School factor has no significant effect to the acquisition of accounting skills of the
respondents.

Ho: Curriculum factor has no significant effect to the acquisition of accounting skills of the
respondents.

SCOPE AND DELIMITATION

This study was conducted to determine the barriers hindering of the accounting literacy

of grade 12 ABM students in establishing the foundation of accounting skills up to their tertiary

level.
 This research is certainly applied to the Nova Schola grade 12 ABM students and maybe

reliable for other different student. As been said, the study only focused on the subject FABM 1

and considering the schools and curriculum factors.

Lastly it covers up the perception of 37+ ABM Senior High School Students in acquiring

accounting skills and identifying its surroundings factors.

SIGNIFICANCE OF THE STUDY

This study will be of great help to different school personnel including the students and

their families. The following will be the main beneficiaries of this study:

Mathematics Teachers. This study will be great help in teachers especially the

Accounting teachers to know and understand their students who lacks on being literate on

accounting subject.

Students. The students will develop their different strategies to pass the accounting

subject. They will able to know what are the barriers on being literate on accounting.

Department of Education. This research study will be a great help. Department of

education can find ways regarding this matter that will able to help every accounting students on

their accounting subject.

Future Researchers. The researcher’s methods, data and findings can serve as their

reference to conclude their own studies that will also give essential solutions for this problem.

This can be used to present variety of facts that can extract exact information.

DEFINITION OF TERMS

Accountant. A person whose job is to keep or inspect financial accounts. In this study

intellectual skills such as problem solving and critical thinking are needed.
 Accounting Education. It is a quarterly international journal devoted to publishing

research-based papers and other information on key aspects of accounting education and training

of relevance to practitioners, academics, trainers, students and professional bodies. In this study

it enables students to possess the necessary skills and prepare them for work places.

Accounting Literacy. Defined as the ability of an individual to make informed

judgments and to take effective decisions regarding the use and management of money. In this

study it is an ability that helps an individual to read, analyze, manage and communicate about the

personal financial conditions that affect material well-being.

NOVA SCHOLA A.Y 2018-2019

Barrion, Mark Lester

Collarga, Ma. Zyra

Magdangal, Imee

Manuguid, Jae Loren

Ortiz, John Gilsom

Resorez, Lyca