Abstract:
The purpose of the study is to examine factors influencing on capital investment decision on
computerized accounting systems by small and Medium Sector Enterprises (SMEs).
Embracing technology is seen everywhere and it is argued that computerised accounting
systems can improve the efficiency and quality of financial information for decision making.
One of the failure factors in SMEs is lack of effective information systems. Manual
information processing for accounting consumes lots of time and leaves a high probability for
misstatements and errors as well. Computerised accounting systems are relative costly at the
beginning and decisions on such an investment cannot be simply taken by SMEs as the
decision is influenced by many financial and non financial factors.
The study is carried out based on four variables which are highly likely to influence such
capital investment decisions by SMEs. Sample is selected from SMEs that have already
implemented computerized accounting systems in Polonnaruwa District in Sri Lanka. Mainly
quantitative analyses by using SPSS are carried out. Study finds that size of investment,
influence from auditors and accountants, perceived benefits of use of information
technology, past bad experiences of manual information processing, the need for submitting
financial reports on time significantly influence capital investment decision on computer
based accounting systems by SMEs.
