Accounting For Cash Funds Final Thesis 3 Repaired

ACCOUNTING FOR CASH FUNDS: ITS IMPACT ON THE CASH FLOW
MANAGEMENT OF MICRO FOOD BUSINESSES
ALEXIS A. CATALBAS
MANICAR G. LLANES
ANALY D. GEDARO
BACHELOR OF SCIENCE IN ACCOUNTANCY
MAY 2023
1
ACCOUNTING FOR CASH FUNDS: ITS IMPACT ON THE CASH FLOW
MANAGEMENT OF MICRO FOOD BUSINESS
An
Undergraduate Thesis
Presented to
The Research Committee of the
North Central Mindanao College
Maranding, Lala, Lanao del Norte, Philippines
In Partial Fulfillment
of the Requirements for AE 8 (Accounting Research 2)
Leading to the Degree of
Bachelor of Science in Accountancy
2
North Central Minadanao College
Maranding, Lala, Lanao del Norte
APPROVAL SHEET
In partial fulfillment of the requirements for AE 8 (Accounting

Research 2) leading to the degree of Bachelor of Science in Accountancy,
this undergraduate thesis entitled “ACCOUNTING FOR CASH FUNDS
PRACTICES: ITS IMPACT ON CASHFLOW MANAGEMENT” prepared
and submitted by Alexis A. Catalbas, Analy D. Gedaro, and Manicar G.
Llanes has been examined and is recommended for acceptance and
approval for oral examination.
KERNEL EDD DOMENEQ P. ARNOCO-NAGAC, MBA, LPT

Adviser
---------------------------------------------------------------------------------------------------
Approved in partial fulfillment of the requirements for AE 8

(Accounting Research 2) leading to the degree Bachelor of Science in
Accountancy with a grade of ________.
PANEL OF EXAMINERS
FERDIE P. MENDOZA, MBA GREGORIA G. UNGAB, CPA, MPA, MHRM

(Member) (Member)
REY M. LAGRADA, MSEE, REE, RME

Chairman
---------------------------------------------------------------------------------------------------
Accepted in partial fulfillment of the requirements for AE 8
(Accounting Research 2) leading to the degree of Bachelor of Science in
Accountancy.
GREGORIA G. UNGAB, CPA, MPA, MHRM
Dean, BSA
3
ABSTRACT
Micro food business absorbs the majority of the urban growing labor force
business, alleviation, and human capital development, however, here in Maranding, the
food business faces many problems in the course of running their business activities
reflecting their financial performance are unaware of proper accounting for cash funds
practices and the proper way of accounting makes cash funds forecasts and budgets of
future cash movement’s useful tools. to optimize profitability because they can increase
revenue for these practices. If the business did not properly practice Book recording,
Budgeting, Operating Activities which can reduce cost it may result in losses of business
can result poor cash management. The purpose of this study is to determine the impact
of accounting for cash practices on micro food businesses in Maranding, Lala, Lanao
Del Norte. Majority of the micro food businesses were in operation for over 1-5 years,
which engages in business activity, that sells and offer service to customer and were
operated by a single proprietor. The results revealed that micro businesses never
practiced book recording related to sales transaction and rarely for budgeting and
operating activities. That these practices are able to generate good cash management
for productivity in their cash inflows, effectively manage decision making, and maximize
profitability in relation to their operation.
Keywords – Book recording, Budgeting, Operating Activities, Cost

reduction, Cash management
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Dedication
This study is wholeheartedly dedicated to the researcher’s beloved
parents, who have been their source of inspiration and gave them strength
when they thought of giving up, who continually provide their moral,
spiritual, emotional, and financial support.
To their Adviser, brothers, sisters, relatives, mentors, friends, and
classmates who shared their words of advice and encouragement to finish
this study.
And lastly, researchers dedicated this book to the Almighty God for
guidance, strength, power of the mind, protection, and skills and for giving
a healthy life.
Thank you.
The Researchers
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ACKNOWLEDGMENT
The researcher cannot express our gratitude; we are extremely
grateful to have received this project's completion because its success and
final outcome depend on it.
We would especially like to thank Mrs. Kernel Edd Domeneq Arnoco

Nagac, our research adviser, for her humble suggestions and assistance in
helping us with on the topic successful.
To the Dean of the College of Accountancy, Mrs. Gregoria G. Ungab, CPA,

MPA, MHRM, for her undying support and encouragement to continually
strive and work hard to finish the study;
To all the respondents who actively participated the survey and gave
their valuable responses also assisted us in conducting extensive
research, which allowed us to learn a lot of new information.
Secondly, we would like to thank also to our parents, teacher,
friends, and the church as a whole for their continuous support with their
corporate prayer for us was what sustained us this far.
Finally, to our Almighty God, Our Abba Father the one who gives us
strength and wisdom, and knowledge we thank you for your presence. We
experienced your guidance day by day, for abundance and great blessings
throughout this study. which enabled us to conclude the research
effectively. We will keep on trusting you for our future.
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TABLE OF CONTENTS
TITLE PAGE
TITLE PAGE i
APPROVAL SHEET ii
ABSTRACT iii
DEDICATION iv
ACKNOWLEDGMENT v
TABLE OF CONTENTS vi
LIST OF TABLES xi
LIST OF FIGURES xiii
CHAPTER 1
INTRODUCTION 1
1.1 Background of the Study 1
1.2 Theoretical Framework 6
1.3 Conceptual Framework 11
1.4 Statement of the Problem 13
1.5 Hypothesis 14
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1.6 Scope and Limitations 15
1.7 Significance of the Study 16
1.8 Definition of Terms 17
CHAPTER 2
REVIEW OF RELATED LITERATURE
2.1 Related Literatures 21
2.1.1 Cash Management Practices Overview 21
2.1.2 Accrual Accounting vs.
Cash Basis Accounting Overview 22
2.1.3 Book Recording 24
2.1.4 Operating Cash flow Using
Accrual-Based and Cash-Based 25
2.1.5 Operating Activities 26
2.1.6 Cash Budget 27
2.1.7 Cash Inflows 28
2.1.8 Budgeting 30
2.1.9 Profitability 32
2.2 Insights Learned from Related Literatures 34
2.3 Related Studies 36
2.3.1 Cash Management Practices Micro and Small Business 36
2.3.2 Cash flow Management-Based Financial Performance 37

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2.4 Insights Learned from Related Studies 39
CHAPTER 3
METHODOLOGY 40
3.1 Research Design 40
3.2 Research Environment 42
3.3 Respondents and Sampling Procedure 44
3.4 Research Instrument and their Validity 44
3.5 Data Gathering Procedure 46
3.4 Statistical Treatment 48
CHAPTER 4
RESULTS AND INTERPRETATION
4.1 The Socio-economic Profile of Respondents 49
4.1.1 Years of Operation in the Business 49
4.1.2 Nature of Business Location 49
4.1.3 Forms of Business Organization 50
4.2 The Accounting for Cash Funds Practices 52
4.2.3 Budgeting 56
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4.3 The Impact on Cash Flow Management 58
4.3.1 Cost Reduction 58
4.3.2 Cash Management 60
4.4 The Correlation Between Socio-economic and the 63
Accounting for Cash fund Practices
4.4.1 Correlation of Socio-economic Profile and 63
Book Recording
Operating Activities
Budgeting
4.5 The Correlation Between the Accounting for
Cash Funds Practices 68
Practices and the Impact on Micro Businesses
4.5.1 Correlation of Cash Funds Practices and
Cost Reduction 68
4.5.2 Correlation of Cash Fund Practices and Cash flow 69
Management
4.6 The Recommendation Based on the Results 71
CHAPTER 5
SUMMARY OF FINDINGS, CONCLUSION, AND RECOMMENDATION

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5.1 Summary of Findings 77
5.2 Conclusion 80
5.3 Recommendations 83
REFERENCES 85
APPENDICES
APPENDIX A. Transmittal Letters 89
APPENDIX B. Questionnaire 92
APPENDIX C. Certificates 99
APPENDIX D. Documentation 102
APPENDIX E. Case Study 104
CURRICULUM VITAE 114
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LIST OF TABLES
Table Page
4.1.1 Years of Operation in the Business 49
4.1.2 Nature of Business Location 49
4.1.3 Forms of Business Organization 50
4.2.3 Budgeting 56
4.3.1 Cost Reduction 58
4.3.2 Cash Management 60

Book Recording
Operating Activities
Budgeting
4.5.1 Correlation of Cash Funds Practices and
Cost Reduction 68
4.5.2 Correlation of Cash Fund Practices and Cash flow 69
Management
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LIST OF FIGURES
Figure Page
1.1 The Schematic Diagram 12
2.1 Cash inflows and Cash outflows 29
3.1 The Locale Map 43
3.2 The Flow Chart 47
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Chapter 1
THE PROBLEM AND ITS SCOPE
1.1 Background of the Study
One of the major problems in generating effective cash inflows and
outflows is through effective cash flow management of business
transactions to customers including micro food business absorbs the
majority of the urban growing labor force business, alleviation, and human
capital development, however, here in Maranding, food business faces
many problems in the course of running their business activities reflection
their financial performance. Therefore, the focus of this study is to assess
the challenges and prospects of the cash cycle cash is obtained from
some source operating transaction and then invested in various productive
combined to produce goods and services for customers who pay for those
goods and services in cash, thereby completing the cycle. It is called “cash
flow” through the business which makes cash funds forecasts and budgets
of future cash movements useful tools of management, and statements of
past cash or funds flow so appealing and popular to the food business.
The problem can be seen by concentrating on the function of cash in a
business entity and the significance of cash movements, in and out. The
impact of this study is to determine the effective cash flow management of
financial performance in micro food businesses keeping

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Also, an accurate record of all business transactions concerning sales,
with proper disclosures thereof, could have a great influence on cash flow
management’s decision-making. In addition, accurate accounting records
are a dependable measure of business profitability in maximizing
profitability by learning the accounting methods: accrual basis and cash
basis. The methods perform the accurate function related to the financial
performance of the micro food business using specific accounting methods
and practices that can help the business produce a positive cash flow
management.
According to Günay & Fatih et al., (2020) cash flow statement also
proves the reasons for the difference between net income and related cash
receipts and payments. On the other side statement of cash flow used with
related disclosures and other financial statements information, it is possible
to assess the effects on a company’s financial position not only of its cash
but also noncash investing and financing transactions during a fiscal
period. Cash flow statement results in effective decision-making, planning,
and auditing functions traditional ratio analysis uses the statement of
financial position (balance sheet) and the profit and loss statement income
statement to measure financial performance. However, the income
statement of a company just shows the accounting profits. Depending on
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this, traditional ratios can sometimes be over or underestimated in
measuring financial performances.
According to Dwi Martani, (2020) Petty cash fund is cash that is
used to make payments for routine expenses of a company and company
agency with a relatively small amount. Cash funds are always needed as
one of the company’s operational funds, for example: buying stationery,
food, office postage, presents, supplies, and so on. From the above
definition, it can be concluded that petty cash is the amount of money used
to make relatively small payments. The purposes of petty cash are (a) to
pay for small expenses and (b) to pay for sudden transactions. (c) For
payment purposes, to assist the smooth running of the leadership activities
in carrying out their duties the need for spending in small amounts, the
entity may not do it by check. (d) To meet the need for cash disbursements
in small amounts, the entity establishes a petty cash fund. The amount of
petty cash funds is adjusted to the needs of the entity. The greater the
need, the greater the amount of petty cash. But for organizations with
small sizes and not much expenditure, the value of petty cash formed is
also small.
Milagrosa (2020), micro, small, and medium enterprises (MSMEs)
are popular in developing countries, especially in the Philippines. The most
important are micro, small, and medium-sized enterprises (MSEs). Agents
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of social development MSEs provide numerous benefits. Millions of poor
people all over the world the opportunity to earn money, training, and work
experience. Furthermore, enterprises serve as valuable partners to large
corporations. These are regarded as economic growth engines worldwide,
as well as poverty alleviation
In an addition, a strong Micro, Small, Medium, Enterprises (MSMEs)
sector is thus indicative of a prosperous and expanding economy. (Senate
Economic Planning Office, 2017). State that the Philippines enacted R.A.
No. 9178, a law that encourages the establishment of Barangay Micro
businesses that act as incubators for new ideas by providing fiscal
incentives to Filipino entrepreneurs, and non-financial incentives to help
them survive and develop into viable businesses. Barangay Micro
Business Enterprise," hereinafter referred to as (BMBE), refers to any
business entity or enterprise engaged in the production, processing, or
manufacturing of products or commodities, including agro-processing,
trading, and services, whose total assets including those arising from loans
but exclusive of the land on which the particular business entity's office,
plant, and equipment are situated, shall not be more than Three Million
Pesos (P3,000,000.00). The above definition shall be subject to review and
upward adjustment by the Small and Medium Enterprise Development
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(SMED) Council, as mandated under Republic Act No. 6977, and as
amended by Republic Act No. 8289.
The main purpose of this study is that the researcher will able to
determine how micro-food business uses their cash usage and earnings in
terms of expense and forecasting cash and what the current practice of
accounting for cash funds in operations activities methods they applied to
their business and also, it's enabling the owners of the business manage
the cash management on the operation to reduce expense and maximize
the profits. Also, the micro-food businesses could have an insight into how
they will run their day-to-day business transactions. This study also
enables micro food businesses to identify the accrual and cash basis of
accounting methods and the purpose of book recording, cash
management, and budgeting which is very essential to help the business
to track their records for accurate recording and what the contribution of
cash flow management is based on their financial performance problems.
The researcher were conducted their research first semester of the
academic year 2022-2023. The researchers were carrying out their
research study in Maranding, Lala, Lanao del Norte. The researchers are
interested in figuring out the micro food business' cash flow management
and cash fund accounting procedures in relation to the practices currently
used for managing businesses. The researchers believed that micro-food
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businesses should understand the concept of cash flow and cash funds
accounting methods to aid liability and measure business profitability. This
enabled them to base their work on the precise financial performance of
the micro-food business and were assist business owners in
understanding the financial situation of their businesses. Additionally, it
provides information for defining financial goals, developing bookkeeping
skills, and making general strategic judgments and income targets.
1.2 Theoretical Framework
In this study, the researchers attached theories that support the
ideas of accounting for cash funds and its impact on effective cash flow
management and cash management in terms of operating activities and
maximization of profitability in micro food businesses. These theories are
The Free Cash Flow Theory by Huseyin (1991), the Cash Management
Theory by Hutchison (2007), and The Cash Conversion Cycle Theory by
Gitman (1974)
The first theory was the Free Cash Flow Theory develop by
(Huseyin, 1991), states that management is in charge of storing cash to
obtain control over it and make investment decisions that may have an
impact on a corporate unit. As a result, the business entities' financial
performance will be improved. Cash flow that is over what is needed to
support an entire project is called the free cash flow projections of the
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company with favorable net present values when discounted at the
appropriate capital cost. By lowering the resources under managers'
control and potentially exposing them to capital markets surveillance,
paying cash to shareholders weakens managers' influence company
needs to get more financing. The cash flow statement and free cash flows.
In most finance, free cash flow is defined as a company's after-tax
operating earnings plus non-cash charges less investment in working
capital, property, plant and equipment, and other assets.
This theory was relevant to this research a statement of cash flows,
sometimes called a free cash flow statement, and explains how a business
manages its finances. Fund flow statement was its previous name. Along
with the income statement and balance sheet, it is a component of the
financial statements. It tracks the entry and exit of cash and cash
equivalents from a company. The main goal of a cash flow statement is to
provide details about a business cash transaction throughout the course of
a specific fiscal year. Additionally, it offers details about business
investment, financing, and operating activities.
The second theory was the Cash Management Accounting Theory
by Hutchison (2007), the practice of collecting and managing cash to
ensure that business entities have the best possible cash balances is
known as cash management. The goal of cash management is to make
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sure that corporate organizations always have enough cash on hand and
that any surplus is put to good use. It is the responsibility of business
organizations to prevent the excessive use of overdrafts as a source of
funding.
In addition, Padachi (2006) states that the day-to-day management
of a firm's short-term assets and obligations is critical to the firm's
performance. Firms with expanding long-term prospects and healthy
bottom lines cannot remain solvent unless they have effective liquidity
management.
This theory was relevant to this study helps cash management refers
to the treasury management process of collecting, managing and utilizing
cash flows to maintain a reasonable level of liquidity, and it involves
financial instruments such as treasury bills, certificates of deposit, and
money market funds, making the same substance for not only individuals
but also organizations it also contributes to increased profitability by
optimizing cash utilization. It also aids in the creation of provisions for
future contingencies such as an economic slowdown, bad debts, and so
on.
The third theory was the Cash Conversion Cycle Theory Gitman,
(1974) states that the model to predict a business’s liquidity needs
proposed the cash conversion cycle as part of the operational cycle, which
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is determined by adding the inventory period to the accounts receivables
period and then subtracting the accounts payables period. Its emphasis is
on the time lag between the acquisition of raw materials and other inputs
and the cash inflows from the sale of finished items, and it shows the
number of days of operation for which financing is required and estimates
of the liquidity requirements that can then be utilized to calculate the
required liquidity in the future.
In Addition, Jose & Lancaster (1996), states that the period
"between cash outlays for resources and cash receipts from product sales"
is measured by conversion cycle theory and is a dynamic measure of
ongoing liquidity management because it integrates balance sheet and
income statement data to construct a time dimension measure.
This theory was relevant to the research because it has a direct
impact on the liquidity and profitability of the company focuses on current
assets and liabilities. Because every business organization is concerned
with how to sustain and improve profitability, they must keep a close eye
on the factors that influence profitability. In this regard, the cash conversion
cycle, as an indicator of liquidity management, must be investigated to see
how it may affect the profitability of corporate units this concept explains
the varying cash conversion period.
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‘
1.3 Conceptual Framework
The researcher was observed the hardship of the micro food
business, which was running due to a lack of cash flow management
practices. As a result, the researchers want to determine the impact of
cash fund accounting for micro food businesses. This study is concerned
with improper accounting practices for cash funds that must base their
revenue on their daily spending, costs, and commercial activities in order
to identify cash outflows and inflows and the source of income. This
investigation focused on cash flow recording, budgeting, and operating
activities transactions and errors that had a direct impact on financial
performance.
The study's schematic paradigm is shown in Figure A below shows
the schematic paradigm of the study. The researchers aim to determine
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the socio-demographic profile of the respondents as to years of operation
in the business, nature of the business activity, and form of business
organization. The accounting procedures that concentrate on bookkeeping,
cash operations, and budgeting are the independent factors that determine
cash flow management. The dependent variable, on the other hand,
focuses on how it affects the financial performance of the micro-food
business. The recommendation is plotted after the study's findings have
been determined.
Accounting for Cash Impact on Cash Flow

Funds Management
 Book Recording  Cost Reduction
 Operating Budgeting Cash

Activities Management
Seminar for Micro
 Cash
 Budgeting Food Businesses
Management
Socio-economic Profile of the 24

Respondents
 Years of operation in Business
Figure 1.1 Schematic Diagram
1.4 Statement of the Problem
This study aims to determine the cash fund accounting practice and
its impact on cash flow management of the micro food business in
Maranding Lala, Lanao Del Norte. Specifically, the study sought to answer
the following research questions:
1. What is the socio-economic profile of the micro food business owners in
terms of?
1.1 Years of operation of the business
1.2 Form of Business
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1.3 Nature of the Business Location
2. What is the fund practices of the business in terms of?

2.1 Book recording
2.2 Operating activities
2.3 Budgeting
3. What is the impact on cash flow management of the micro food
businesses in terms of cash management, and cost reduction on financial
performance?
4. Is there a significant relationship between the socio-economic profile of
the respondents and the cash funds practices?
5. Is there a significant relationship between cash funds practices and the
impact on the cash flow management of the micro food businesses in
terms of cash management and cost reduction?
6. What recommendation can be designed based on the results of the
study?
1.6 Hypothesis
Ho1: There is no significant relationship between the socio-economic
profile of the respondents and the cash fund accounting.
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Ho2: There is no significant relationship between cash fund accounting
and the impact on the cash flow management of the micro food businesses
of cash management and cost reduction.
1.6 Scope and Limitations
This study was focused on cash fund accounting and its impact on
the cash flow management of the micro food business in terms, of
budgeting of the cash management and increased profitability of the food
micro-businesses around Maranding. In addition, it encourages micro-food
businesses to enhance and perform their work by managing and utilizing
cash funds on operating activities on cash flow management in order to
maintain a reasonable level of liquidity consistently and precisely. As a
result, it contained the respondents' years of operation in business nature
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of business activity form of business organization. An investigation was
also carried out in Maranding Lala, Lanao del Norte.
The descriptive correlation research approach was employed in this
study. According to their target location for small businesses, most
respondents were micro food, business owners. Structured questionnaires
are employed by the researchers to conduct their survey. Statistical
techniques are used to examine and understand the data being collected.
1.7 Significance of the study
This study was conducted by the researchers is significant to:
Entrepreneurs. That, entrepreneurs, may utilize this study about their
level of practices on accounting for cash funds of their operation which will
serve as an effective basis for changes and improvement on the
operations to monitor the financial performance of its respective
businesses. It will also provide them with knowledge about effective cash
management which will serve as the key to achieving long-term goals.
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Micro food business. This research will offer information on how
accounting for cash funds helps micro food businesses may provide them
the opportunity to enhance their skills in the proper allocation of cash in the
micro food business in terms of budgeting and operating activities that may
result in good cash management and accounting procedures used in their
business in relation to revenue, profitability, and how they obtained money
to fund their operations. Additionally, it benefits the owners by teaching
them how to effectively record transactions for future employment.
Accountancy Students. The researcher will offer that students can learn
about the application of accounting for cash funds and cash flow
management play a role in terms of budgeting and operating activities on
an entity's financial performance by taking this course. They will learn how
important this section of the accounting topic is in actual application on
businesses that they may encounter while practicing their profession.
Future Researchers. Future academics interested in doing studies on the
same issues will benefit from knowing about this study as a stepping
stone. It provides details on how the micro food business applies cash
funds and cash flow management on operations, that affect their financial
performance of the business and to pursue a wider and more in-depth
study-related subject.
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1.8 Definition of terms
The following terminologies are defined conceptually and/or
operationally depending on how it used in the study to help readers better
comprehend.
Accrual basis – in this study, it refers to an accounting method where all
expenses incurred should be recorded regardless of when paid, and
revenue will be recognized when earned regardless of when cash is
collected.
Book Recording - In this study, it refers to accounting records involve
records asset and liability records, monetary transactions, and journals and
ledgers in preparation of financial statements.
Budgeting – In this study, it refers to an accounting of past-year and
current-year expenditures, revenues, transfers, and prior-year adjustments
in terms of planning and enacting a fiscal, allocation, and disbursement of
monetary resources.
Cash basis - this study, it refers to an accounting method where all
revenue will only be recognized when there's an actual receipt of cash, and
expenses will only be recorded when the such expense is already paid.
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Cash flow statement - In this study, it refers to a financial statement that
provides an understanding of the cash inflows and outflows that are critical
for meeting the company's short-term and long-term obligations to its
suppliers, and customers, and that involves operating financing investing.
Cash management – this study, it refers to managing cash inflows and
outflows, of cash management profitability and includes proper collection,
is to maximize liquidity and minimize the cost of funds.
Entrepreneurs - in this study it refers to the driving force behind a
business venture. This individual recognizes an opportunity, secures
adequate finance, recruits staff, and acquires other assets in order to
supply goods and services to customers.
Expenditure - In this study, it refers to a payment or the expectation of
future of a liability in exchange for services or goods is referred to as an
expenditure.
Expense - In this study, it refers to accounts are records of how much a
business spends on day-to-day costs over the course of an accounting
period.
Liquidity - in this study, it refers to an asset that is, can be converted into
ready cash without affecting its market price and its ability settles short-
term obligation.
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Long-term debt – In this study, it refers to a liability that will take more
than a year to pay off. Bonds payable, long-term notes payable, mortgage
payable, and lease liabilities are the most common types of long-term debt.
Micro food business – as (MSMEs), refers to any business entity or
enterprise engaged in the production, processing, or manufacturing of
products or commodities, including agro-processing, trading, and services,
whose total assets including those arising from loans but exclusive of the
land on which the particular business entity's office, plant, and equipment
are situated, shall not be more than Three Million Pesos (P3,000,000.00).
The above definition shall be subject to review and upward adjustment by
the Small and Medium Enterprise Development (SMED) Council, as
mandated under Republic Act No. 6977, and as amended by Republic Act
No. 8289.
Operating activities – In this study, it refers to the amount of money a
business earns from its ongoing, regular business operations, such as
producing and selling goods and providing customers a service.
Petty cash fund - In this study, it is a small number of bills and coins kept
used to make incidental purchases on the premises by a business to pay
for minor expenses in operating activities in business.
Profitability- in this study, it refers to business generates profits is defined
as an income in that is calculated by subtracting the expenses from the

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revenue.
Short-term debt - In this study, it refers to debt includes all debt having an
original maturity of one year or less and interest in arrears on long-term
debt.
Chapter 2
REVIEW OF RELATED LITERATURE
This chapter lists the various texts that were judged useful and
relevant to the current research.
2.1 Related Literature
These served as linkages between readers and previously
completed studies, providing information about things that have already
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been established or concluded by other authors, allowing readers to grasp
the evidence that has been presented and has been gathered by earlier
researchers, and putting the current research project into context. The
following are the selected related pieces of literature:
2.1.1 Cash management practices: Overview
According to Linert, (2017), cash management is a business
strategy for managing cash in order to maximize liquidity. Each business
must have proper cash management to achieve its targeted goals and
objectives by improving its cash allocation and planning. The business also
needs to have internal controls for cash management for selling their
goods and providing their services using cash. Good internal control also
requires the separation of duties in managing cash including the
separation of the cashier personnel from the accounting duties. Cheatham
et al., (2018),
every micro food business and small business rely on cash management.
One of the most dangerous misconceptions among entrepreneurs is the
belief that adequate profits will automatically result in adequate cash flow.
Small business owners are unable to manage their cash flow effectively
due to a lack of cash management knowledge and skills. In addition, Cash
management, as defined by Deb, et al., (2018), is the management of cash
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flows into and out of the firm, cash flows within the firm, and cash balances
held by the firm at a given point in time.
2.1.2 Accrual Accounting vs. Cash Basis Accounting: Overview
As stated by Chizoba Morah et al., (2020) the main difference
between accrual and cash basis accounting lies in the timing of when
revenue and expenses are recognized. The cash method provides an
immediate recognition of revenue and expenses, while the accrual method
focuses on anticipated revenue and expenses. Method of accrual basis the
accrual method records accounts receivables and payables and, as a
result, can provide a more accurate picture of a company's profitability,
particularly over time. According to Generally Accepted Accounting
Principles (GAAP), which was released by the Financial Accounting
Standards Boards, the accrual method is typically required for businesses
that submit audited financial statements (FASB). Under this approach,
revenue subject to accrual accounting is recorded as it is earned. In
contrast to the cash method, the accrual method accounts for money
before it is received by recording revenue when a good or service is
delivered to a customer with the expectation of future payment. Similarly,
costs for goods and services are recorded before any cash is paid for
them. Method of cash basis the cash method's primary advantage is its
simplicity—it only accounts for cash paid or received. It is also simpler to
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monitor a company's cash flow. It is beneficial to sole proprietorships and
small businesses because it is unlikely to necessitate the staffing of
additional staff (and the related costs). The cash basis method is not
acceptable under Generally Accepted Accounting Principles (GAAP).
Accounting on a cash basis revenue is reported on the income statement
only when cash is received under this method. Expenses are only
recorded when cash is paid out. Small businesses and individuals typically
use cash as a payment method.
2.1.3 Book recording
According to Balagobie (2019), maintaining records is essential for a
firm to operate successfully. A thorough record-keeping system enables
business owners to create accurate and timely financial reports that
illustrate the development and present state of the company. Performance
during a period of time and performance over a subsequent period can be
compared using the financial report produced by an effective
recordkeeping system. A tool for tracking success in a certain area is an
accurate record of the company's financial performance. Additionally,
record keeping refers to the management of records that are created,
received, and kept by a person or an organization in order to fulfill legal
obligations or carry out business maintaining accurate financial records is
the key to the success and sustainability of modern businesses for
36
instance, assertions that record-keeping offers important information about
the financial stability and current performance of a company and that
managers find these records helpful in making decisions. Additionally,
Mwebesa, et al., (2018), maintaining financial records is a crucial
component of managing a development group's operation. Maintaining
accurate financial records may significantly enhance the management
decisions made by a business owner or manager on marketing, borrowing,
pricing, inventory, and product development.
2.1.4 Operating Cash flows Using Accrual-Based and Cash-Based
Accounting
As stated by Frankel, & Sun, Y. (2018) Depreciation, changes to
accounts receivable, changes to prepaid expenses, changes to inventory,
and changes to accounts payable makeup disaggregated accruals that
forecasting models use disaggregated accruals as predictors are beneficial
for predicting cash flows and are more powerful than models that only use
historic earnings or historical cash flows. In addition, Barth et al., (2019),
Cash Flow from operations this accounting data, known as cash flow from
operations, is typically available from a company's cash flow statement
used cash flow information immediately stated in cash flow statements as
a predictor variable in their studies of cash flow prediction, while other by
considering the difference between net income and accruals. Earnings are
37
regarded as a major metric in assessing a company's success. That is also
a crucial component in managing debt and debt contracts. Earnings are
also utilized as a critical variable and play a significant role in forecasting a
firm's future cash flows. Apart from cash from operations, accruals have
also been employed by researchers as predictor variables of future cash
flows, and they are quantified in various ways by different researchers.
2.1.5 Operating Activities
As stated by Ward and Foster (2019), state that cash flow from
operating activities is anticipated two years before enterprises enter the
market with monetary difficulties the authors, on the other hand, present
evidence that the cash flow from ongoing, regular business operations,
such as producing and selling goods providing customers a service
generated by investment and financing activities has a more limited role in
forecasting financial problems than the cash flow from operations. In
addition, Gomez (2019) agrees with this perception, and contends that the
most significant factor is operating cash flow to foresee a financial
catastrophe but, if functioning. Cash flow from investment is positive,
whereas cash flow from operations is negative financial activities are
extremely unfavorable, and businesses will suffer as a result of having
financial issues. According to Continuing Professional Education
Accounting (CPEA) within the cash flow statement, operating activities is a
38
cash flow classification. The primary source of income for an entity is items
falling into this category, so revenues and expenses are frequently linked
to cash flows. Cash receipts from the sale of goods and services, as well
as cash receipts from the collection of accounts receivable, are two
examples of cash inflows from operating operations. Cash outflows from
operating activities include all payments made to vendors, staff members,
and to settle fines or legal actions.
2.1.6 Cash Budget
According to Moore, et al., (2019), believed that a small business's
cash budget is the most important. A cash budget is a tool for managing a
business's cash flow. This is a budget that focuses on the money that
comes in and the money that goes out of the business. The cash budget is
used to anticipate and overcome cash flow problems when there is little
cash available, or to indicate that there is excess cash inflow available for
investment. As stated by the ACCA Association of Chartered Certified
Accountants (2017), a cash budget is a tool used in businesses to ensure
that there is enough cash to meet all operational goals. In addition, CIMA
Chartered Institute of Management Accountants (2018), states that a cash
budget, according to is a budget that includes cash received from
revenues and other incomes as well as the estimation of cash payments
and outflows in the business to determine how much cash the business
39
has available. As mentioned by Yiadom et al., (2018), a cash budget
allows the company to determine potential uses for planned incomes as
well as how to plan for future payments.
2.1.7 Cash Inflows
According to Nikolaev Valeri V., 2022, state that cash inflows it
addresses the information added by accrual accounting methods, testing it
is still up in the air and asks whether accruals-based earnings provide
better information about future operating cash flows than operating cash
flows themselves demonstrates that, compared to a similar earnings metric
derived on an accrual basis, earnings surpass operational cash flows in
terms of predictive power. When cross-sectional changes in the
relationship between enterprise earnings and future cash flow are
considered, the finding becomes clearer.
Cash inflow and outflow
40
Owners’ Borrowed Sale of fixed
capital funds assets
CASH
Collection of
Cash accounts
sales receivable
Inflows
Payment of Payment
fixed assets Outflows of
expenses
Payment of account Payment of Payment of

Payment for
receivable loans wages
Inventory
Figure 2.1 Cash in flows and Cash outflows
According to Moore et al., (2019) stated that the cash flow of a
business can only be calculated once the difference between sales
revenue and cash receipts is determined. When a transaction takes place,
revenue is recorded and profits rise. Unless the transaction was a cash
sale, the cash flow is unaffected at this point. Cash receipts and cash
inflows increase only when cash is generated from the sale or when
customers pay off the outstanding amount due. Similarly, it is necessary to
distinguish between expenses and cash payments. When items such as
electricity are used or wages are owed, expenses occur. Payments occur
41
when cash is exchanged for expenses incurred, such as loan and wage
payments.
2.1.8 Budgeting
According to Indhumathi C., & Suresh, L. Kumar, et al., (2019)
budget is a numerical representation of a plan of action for the upcoming
fiscal period, it represents management's written operational budget plan.
A plan expressed in monetary terms. In addition Mulani, Chi & Yang,
(2019), state that the formal budgeting procedure in Micro, Small, Medium,
Enterprises (MSMEs) has two components: an official budget planning
process and an official monetary control procedure Budgeting planning
and monetary control procedures may have a positive impact on business
performance. Regardless of how tight the budget is, if the goals are clear
and attainable, it will undoubtedly motivate employees, resulting in
improved financial performance in the organization. Budget and fiscal
controls are the phrases budgetary control for planning, coordination, and
control in performing duties. In addition, the Management Accounting of
the Chartered Institute of Management Accountants (CIMA), state that a
budget is a quantitative statement for a specific time period that may
include anticipated revenues, assets, liabilities, and cash flows. A budget
gives the business a direction, helps with activity cooperation, and makes
control easier. Budgeting is a crucial management tool for organizing,
42
controlling, and overseeing the financial aspects of a project or
organization. It works by calculating the income and outgoings for a
predetermined time frame. Monitoring income and expenditures over the
time of a year or a certain project time period. Aiding in determining
whether changes are required in programs and objectives project income
and expenses forecasting, including timing and availability of income. As
stated by Olszak & Ziemba, (2021), revealed the budgeting of Micro,
Small, Medium, Enterprises (MSMEs) underwhelming performance was
due to poor budgeting procedure cooperation, a lack of top monitoring
experience, and inadequate budget evaluation skills for MSMEs. It can be
difficult to determine when a business is struggling because many MSMEs
use informal budgeting that is also not structured in some organizations
and official in others.
2.1.9 Profitability
According to Aliet (2019), profitability is defined as income created in
the business that is calculated by deducting expenses from income the
author went on to say that the word "profitability" is derived from the word
"profit." represents this is the difference between the total and business
revenue and its entire cost. As stated by Karuru (2018), profitability is the
difference between a company's sales and its expenses during normal
business operations. As mentioned, Karuru also underlined the importance
43
of maximizing a business's sales amount by significantly minimizing the
business's expenses. The profitability is a positive balance after calculating
the difference between the businesses sales and the operational
expenses,
Profit = Sales – Expenses.
As mention by Patel (2018), the application of fundamental cash flow
management techniques will help firms plan for unforeseen cases in the
future. A potential reason for this frequency is that small business owners
were indeed lacking in cash business management. Since many small
business owners disregard cash management procedures, the main
objective of this study is to examine the sales and profits of cash
management procedures.
2.1.10 Cost Reduction
Mansor, M. F., Abu, et al., (2018). Numerous studies are
concentrating on cost savings after outsourcing a number of tasks to
outside professionals. According to the research that has been found to
precisely link outsourcing activities to cost savings, businesses who use
outsourcing clearly have a large cost-efficiency advantage over their
counterparts that use no outsourcing strategy at all outsourcing can
increase a business's cost-efficiency in which outsourcing was used in
their operations that demonstrates outsourcing increased their productivity

44
and profitability. The goal of outsourcing is to reduce costs while increasing
productivity and saving time. outsourcing been shown to increase
productivity in enterprises.
Gilley (2019) claims that the authors emphasized the need for
outsourcing that might help the micro business cut costs. This occurs when
the cost of upgrading maintenance internally is more than the cost of the
outsourcing decisions, which include sharing risk on technology
investment, operating cost reduction, access to specialist knowledge, fixed
costs, and variable cost because of operation of the business, and
perception.
2.2 Insights Learned from Related Literature
The researchers, based on the readings in the related literature
presented, learned and acquired knowledge as to the importance of
accounting practices and cash flow management not just to the micro food
businesses and large companies, but as well as to the small business.
Cash flow is very essential in every business as it represents and
measures the liquidity and profitability of the business. It is also therefore
important to small businesses. One of the measures to consider cost
reduction of the business outsourcing and control expense in order for the
business to provide an effective operating activity is through looking into
the cash fund accounting and the cash flows management. The medium
45
used for operational activities is cash, therefore, it is very important to
consider how well an entity manages its cash flows. Even small expenses
in a business should be recognized and accounted for properly as they
deem material to that kind of business. As mentioned, it is always the
focus of every business is profitability. Accordingly, effective cash flow
management will improve the entity’s financial performance, thus, it is
considered to be the key role to achieving profitability. The food micro food
business should also consider this, and must be knowledgeable about this
measure. The accounting methods and practice should be exercised in
Micro, Small, Medium, Enterprises (MSMEs) to understand concept cash
flow management also to ensure accuracy and long-term run of the
business. In addition, if this will be practiced by owners, the cost reduction
could also help the business operation control the cash movement in the
business transaction in the form of liquidity to help to improve the financial
performance of the micro food business.
46
2.3 Related Studies
2.3.1 Cash Management Practices in Micro and Small Businesses
Foreign Studies
According to Ahmad (2017), financial constraints in SMEs include
the inability of the business to manage cash flow and create sufficient
sales and income. Non-financial aspects of the failed firm include service
quality, owner experience, customer satisfaction, and competitors. Cash
management is critical for all businesses to improve their financial
management and sustainability. Each firm needs a high level of cash
management procedures to fulfill its objectives. Entrepreneurs on the need
of having effective internal cash management controls in order to avoid
cash manipulation scarcity and other financial problems. Cash
management strategies are critical for any organization looking to boost
profitability, sustainability, and long-term planning. Cash budgets and cash
flows are also examples of management methods cash management is
crucial in explaining the inflow and outflow of cash, which relates to cash
movement from receipt to payment. Cash management is also the most
47
important. Entrepreneurs must perform critical tasks in order to maintain
the profitability and sustainability of their enterprises. In addition, (Abdul
and Ahmad 2017), states that the financial constraints in micro businesses
include that the business is unable to expand. Manage cash flow and
generate sufficient sales and revenue in terms of non-financial
consequences, the failed business service quality, owner experience,
customer contentment, and competitors are all issues. Each business
needs to have proper cash management to achieve the targeted goals and
objectives by enhancing their allocation and planning in the cash.
2.3.2 Cash flow Management Based Financial Performance
According to Gunay, F,et al.,(2020), financial performance analysis
supports businesses' efficient planning, auditing, and decision-making
processes. A complete view of a company's performance may really be
offered through financial performance analysis. An income statement
contains details about an organization's operational outcomes. One of the
key roles of financial accounting is the measuring of income. Three
activities provide a corporation with its financial flows. The term "cash flows
management from operational activities" or "operating cash flows" refers to
cash flows that are connected to operating operations, such as net income,
and changes in current assets and liabilities other than financing activities.
A set of financial accounts for any business includes the cash flow
48
statement as one of the crucial tables that come from operating, investing,
or financing operations, this statement of cash flows categorizes cash
inflows and payments. Business owners should compute ratios using the
statement of cash flows, which shows the sources and uses of cash, to
understand a company's financial status.
49
2.4 Insights Learned from Related Studies
Based on the readings of the researchers from the related studies
presented, the cash flow statement is one of the key tables in every
business, especially in micro businesses on the set of financial records.
This statement of cash flows classifies cash inflows and payments into
operating, investing, and financing operations. To comprehend a
company's financial situation, stakeholders should construct ratios using
the statement of cash flows, which displays the sources and uses of cash,
the micro food business is efficient in producing high returns on sales and
comparatively little money spent. Accordingly, effective cash flow
management and accounting practices will provide high returns of
profitability and effective cash flow management. This may help small
businesses like micro food business which requires knowledge of effective
cash flow management. Similarly, to this, it has been stated that
accounting methods may considerably boost the performance of micro
food businesses by providing data for better planning, managing, and
monitoring of everyday operations. Additionally, it was asserted that
keeping accurate records would help micro food business owners monitor
50
their operations, which would boost their profitability and capacity to
survive.
Chapter 3
RESEARCH METHODOLOGY
The research methodologies that were employed in this study were
described in this chapter. The research design, research environment,
respondents and sampling techniques, research tools and their validity,
data collection procedures, and statistical treatment of the data were all
discussed.
3.1 Research Design
The research design that was used in this study is descriptive
correlation research design which involves gathering data in order to
answer the questions on cash fund accounting and its impact on cash flow
management. This is when the researchers summarized and explained
effective cash flow management and accounting cash fund among on
financial performance of the micro food business in Maranding, Lala,
Lanao Del Norte. A structured set of questionnaires was used to determine

51
the cash fund and its impact on cash flow management. Furthermore, the
descriptive research approach was employed due to the suitability and
complementary nature of the data acquired.
3.2 Research Environment
This study was conducted at Maranding, Lala, Lanao Del Norte.
Maranding is a Barangay in the Municipality of Lala, Lanao del Norte,
Philippines. The barangay is composed of 27, Purok. In the province of
Lanao del Norte. According to the Census 2020 Its population as
determined by the 2020 Census was 11,897. This represented 16.20% of
the total population of Lala. Purok lived by both Christians and Muslims.
Additionally, Maranding is a commercial hub that serves a variety of
businesses, both large and small in scale. The establishment of a small
size business was the catalyst for attracting visitors to the area, which
eventually led to the establishment of a big-scale enterprise. Appliance
stores, banks, gas stations, drugstores, restaurant vendors, and were
among the large-scale enterprises that sprouted up.
52
Philippine Map
53
Figure 3.1. The Locale
3.3 Respondents and Sampling Procedures
The respondents of this study were the micro food business vendors
of Maranding which can be a source of information on cash fund
accounting and its impact on cash flow management and current
accounting practices and its impact on the financial performance that the
micro food business is being used.
Researchers used a stratified sampling method in selecting 30
respondents as their sample population which was chosen from the
different types of micro food businesses around barangay Maranding.
Moreover, this is needed to come up with meaningful results and to really
determine the cash fund accounting and its impact on the cash flow
management practice of the target respondents.
3.4 Research Instruments and their Validity
The required data were collected from the respondents using a
completely structured set of research questionnaires. The first tool used
was a survey questionnaire, which provide quantitative information on the
respondents' socioeconomic profiles of the respondents. The second

54
instrument is concerned with the activities given by the researchers to
determine the fund practices of micro food businesses their its impact on
cash flow management in the micro food business. It is composed of
quantitative type of questions given by the researchers to the respondents.
This was instrument checked by the thesis adviser for validation
SCORING PLAN AND LEVEL OF RESPONSE OF ASSESSMENT
ACCOUNTING CASH FUNDS

RANGE OF INTERVAL DESCRIPTION INTERPRETATION
1 Never Never Practiced
2 Rarely Rarely Practiced
3 Sometimes Sometimes Practiced
4 Often Often Practiced
5 Always Always Practiced
SCORING PLAN AND LEVEL OF RESPONSE ITS IMPACT IN THE
CASH FLOW MANAGEMENT OF MICRO FOOD BUSINESS
RANGE DESCRIPTION INTERPRETATION
5 Strongly Agree Major impact
4 Agree Minor impact
55
3 Neutral Moderate impact
2 Disagree Minimal impact
1 Strongly Disagree No impact
3.5 Data Gathering Procedure
The survey questionnaire was a very crucial component of the
gathering of data. The researchers were developed a set of questions that
aims to determine the socio-economic profile of the respondents in terms
of years of operations in the business, the nature of the business, and the
form of business they are present. The questionnaire prior to its formal
distribution to the respondents of the study is distributed to the selected
micro food businesses in Maranding, Lala, Lanao Del Norte. Indeed, it
constructs accurately and reliably delivers the necessary data needed for
this study.
56
1. Develop a set of 2. Prepare
START questionnaires of letter for
socio-economic approval
5. Select 30 4. Enter into a 3. Validate the

respondents community questionnaire
8. Tally,
6. Conduct the 7. Retrieve the analyze,
survey questionnaire evaluate and
interpret the
result.
END
Figure 3.2 The Flowchart in conducting the study and gathering procedure
57
3.6 Statistical Treatment
The following steps must be taken in order to correctly understand the
data being collected. The results of the study on the accounting for cash
funds and its impact on the cash flow management of micro food business
(profitability test) on microbusinesses in Maranding, Lala Lanao del Norte
were analyzed and interpreted using the statistical tool.
1. Frequency-Percentage. The number of people who used this tool
was calculated in their responses, as well as their proportions in
relation to the demographic profile of the respondents this aided in
the solution of the study's first problem.
2. Weighted Mean. This determines the level of responses on each
item indicator of effective financial management and on the accuracy
of the book of accounts and financial performance test of micro
businesses. This helped to answer problems 2 and 3 of the study.
3. Pearson Correlation. This tool computed the correlation between
the demographic profile of the respondents and the dependent and
58
independent variables. This helps to answer problem 4 and 5 of the
study.
All the computations were done through micro statistics software, SPSS+,
which will be done by an accredited statistician.
CHAPTER IV
PRESENTATIONS, ANALYSES, AND INTERPRETATION OF DATA
This chapter discusses the data that are shown in the tables. Data
were analyzed, interpreted, and supported by related literature and
studies.
4.1 The socio-economic profile of the micro food business owners in

terms of:
4.1.1 Years of operation of the business;
4.1.2 Nature of the Business Location.; and
4.1.3 Form of Business.
Table 4.1.1 Years of Operation in the Business

Years of Operation Frequency Percentage
1-5 years 19 63.3
6-10 years 10 33.3
59
11 years and above 1 3.3
Total 30 100.0
Table 1 presents the years of operation in the business. As shown in
the table, the highest years in operation are in the years between 1 years
to 5 years, which got 19 or 63.30% and the lowest years are in between 11
years and above which got 1 or 3.3%.
The table above implies that the majority of the interviewed
respondents were in between 1 to 5 years of operation. This means that
most of the micro food businesses were operating for lesser than 5 years
since they just started selling their products in designated areas of public
space, sidewalks, trading is permitted by locals, products offered were
prepared food, and services to customers
According to the study by Gajjar, Vavra, et al. (2017), the majority of
food firms are single-proprietorships with 1–5 years in business, followed
by 6–10 years or more of operation. Years of experience selling their
products in designated areas of public space such as public roads,
sidewalks, parks, and fields where trading is permitted, products offered
were prepared food, services offered product quality, price, service,
consumer, personal factors, equity and product features are some of the
factors that influence customer loyalty as well as the satisfaction that can
measure running their business in years operation.

60
Table 4.1.2. Nature of the Business Location
Nature of the Business Frequency Percentage
Food cart 20 66.7
Fixed store 8 26.7
Temporary 2 6.7
Total 30 100.0
Table 2 shows the nature of the business location. The results
showed that 20 or 66.70% owned a food cart, 8 or 26.70% were having a
fixed store, and 2 or 6.70%% were temporary.
The data infer that the majority of the interviewed respondents
owned a food cart. This means that the majority of the micro-food
businesses in the area were in operation selling and offering services to
the customer are using food carts.
This research was funded by the Philippine Franchise Association's
Food Cart Entrepreneurship Program (2020) and a number of privately
owned business franchises to contribute research findings on the
management behavior of operational activities, micro food businesses. The
majority of micro food businesses operate in food cart franchises, which
are single-sole proprietorships that regularly engage in selling, servicing,
planning, and controlling their products in malls, public locations, and
61
sidewalks where locals are permitted, but rarely carry out organizing,
staffing, and leading.
Table 4.1.3 Form of Business

Form of Business Frequency Percentage
Sole Proprietorship 30 100.0
Partnership 0 0
Total 30 100.0
Table 3 presents the forms of business organization. The data
revealed that 30 or 100% of the micro food enterprise are solely owned by
sole proprietorship while 0 in partnership.
The results imply that all of the interviewed respondents were sole
proprietorship businesses. This means that all or majority of the micro
businesses were owned by a single proprietor since it is the most common
form and easy to organize than any other form of business.
The result of this is supported by the study of Dioneda and
supported by Department of Trade and Industry (2017), a study which
found that food services are a preferred sector throughout all business
classifications Sorsogon City data also revealed that in terms of the form of
ownership and the majority of micro-enterprises in Sorsogon City were
under sole proprietorship, a legal entity that separates the owner from the
business, which means that the owner is separate from

62
business personally liable for all of the business's debts and obligations. In
payment for that liability, the owner retains all of the company's profits.
The result is supported by the Study National Survey Report Micro,
Small, and Medium Enterprises (MSMEs). (2017), Small Business
Administration where over 70 percent of US Businesses are Registered as
Sole Proprietorship, these reflect the challenging operating environment for
MSMEs s and the importance of during early stages which has little capital
or resources to work and with few debts to pay this means that
4.2.1 The cash fund practices of the business in terms of?
4.2.1 Book recording

4.2.2 Operating activities
4. 2.3 Budgeting
Table 4.2.1 Book Recording

Statements Mean Response Interpretation
1. Record day-to-day transaction of the

business that involves cash fund and Never
1.53 Never
operating activities track profit and loss, Practiced
business expenses, and cash flow.
2. Carefully record and ensure the correct
Never
amount in the sales and expenses on 1.23 Never
Practiced
operating activities.
63
3. Separate records of cash inflow and
Never
outflow transactions of expense and 1.63 Never
Practiced
income in cash flow.
4. Adjustment entries of the transaction
Never
recognized the credit and debit on a cash 1.00 Never
Practiced
basis and accrual basis.
5. Do posting of record transactions to
1.00 Never Never Practiced
General Ledger.
Never
Average Mean 1.29 Never
Practiced
Legend: 1.00 -1.80 Never (Never Practice)
1.81 – 2.60 Rarely (Rarely Practice)
2.61 – 3.40 Sometimes (Sometimes Practice)
3.41 – 4.20 Often (Often Practice)
4.21 – 5.00 Always (Always Practice)
Table 4 presents the cash fund practices in terms of book recording.
As shown in the results, the majority of the micro businesses never
practiced book recording. The table shows that the highest mean is 1.63
which states that the business separate records of cash inflow and outflow
transactions of expense and income in cash flow.
The table implies that the majority of the micro food businesses
never practiced the book recording in cash fund practices. This means that
they never practiced recording their day-to-day transactions in relation to
the movement of their cash as well as the income and sales they’ve
realized.
64
According to Kusakabe, (2016), most micro businesses lack the
practice of keeping records of their daily cash flow in terms of recording
their business transactions. For them, an estimate is sufficient to keep
track of their business furthermore, not all micro food has a savings
account with any financial institution, they personally save the money they
make from their business.
According to Thumarak, et al., (2017), Bookkeeping is the skill of
meticulously keeping records of transactions involving money, such as
purchases, sales, receipts, and payments. There are two types of
bookkeeping: single-entry and double-entry. Commonly used
bookkeeping records for small food enterprises are daybooks containing
payment receipts, inventories, sales, payment receipts inventories, and
both sales and purchases. Many micro food businesses do not maintain
thorough records of their business is sometimes done with memorized
records.
Table 4.2.2 Operating Activities
Statements Mean Legend Interpretation
1. Separate cash fund is properly

Always
segregated solely for activities and 4.23 Always
Practiced
operations.
2. Check cash flow operation of
Sometimes
transactions activities from the 3.40 Sometimes
Practiced
business.
65
3. Monitor cash inflow and outflow
Never
operations from book recording 1.47 Never
Practiced
transactions.
4. The business does customize
Often
budgeted cash fund allocations in 3.73 Often
Practiced
operating activities.
5. Determine the cash receipts
Sometimes
from operations are separately 3.37 Sometimes
Practiced
recognized.
Sometimes
Average Mean 3.24 Sometimes
Practice
Table 5 presents the cash fund practices in terms of operating
activities. As shown in the results, the majority of the micro businesses
sometimes practiced cash fund practices relative to operating activities.
The table shows that the highest mean of 4.23 stated that the business’
separate cash fund is properly segregated solely for activities and
operations.
The table further infers that the majority of the micro food businesses
sometimes practiced cash fund practices in terms of operating activities.
This means that they sometimes practice the utilization of cash funds for
66
operations and monitor the inflows and outflows of cash from business
operations.
According to Aziz, ( 2019), revenue is generated through cash fund
practices in the operational operations of the enterprise and has a direct
impact on determining cash flow in the financial status of the section's net
revenue or loss.
As stated by Foerster, Ball et al., (2019), the significance of
determining cash flows from operating activities is to correlate the
business's stability with positive operating revenue for purposes such as
fulfilling obligations and maintaining its liquidity, as well as identifying the
business's operational capacity, payment distribution, and new activities
without turning to fund sources, and forecasting the future cash flows.
Table 4.2.3 Budgeting
Statements Mean Legend Interpretation
1. Make a budget allocation of cash

Always
funds for future transactions of overhead 4.83 Always
Practiced
expenses.
2. Properly forecasted the future
demand and supply of goods that I 4.17 Often Often Practiced
produce or sell.
3. Track money spending to create a Rarely
2.10 Rarely
solid sales budget plan. Practiced
67
4. Money allocation in a business sales
transaction for cash flow operating 4.07 Often Often Practiced
activities.
5. Carefully tracks income and expenses
Rarely
in a month to determine current 1.87 Rarely
Practiced
spending levels.
Often
Average Mean 3.41 Often
Practiced
Table 6 presents the cash fund practices in terms of budgeting. The
results showed that the majority of the micro businesses always practiced
cash fund practices relative to budgeting. The table shows that the highest
mean of 4.83 stated that the business makes a budget allocation of cash
funds for future transactions of overhead expenses.
The table further infers that the majority of the micro food businesses
always practiced cash fund practices in terms of budgeting. This means
that they were always practicing making the budget allocation of cash
funds fund for future transactions and properly forecasted the future
demand and supply of goods that they will produce.
68
According to Avika, Hari & Abanis et al., (2016), in order to improve,
businesses that sell goods and provide services in cash must have proper
internal control and cash practices. The business may have influenced its
proprietor of duties by influencing the practices of cash management in the
enterprise in managing cash ability as well as the budget allocation of cash
based on target outcome in running operation. However, the procedures
for managing cash in SMEs are unstructured, which may result in poor
cash management practices, SMEs maintain budget allocation and are
able to calculate, budget, and predict expenses and profits to be achieved
in operational activities in short-term goals to possess good strategies and
ensure that they can achieve their targets.
4.3.1 The impact on cash flow management of the micro food

businesses in terms of:
4.3.1 Cost Reduction; and
69
4.3.2 Cash Management
Table 4.3. 1 Cost Reduction
1. Reduce expenditures on supply

Strongly
materials as purchases were 4.53 Major Impact
Agree
based on budgeted amount.
2. Prevent the risk of losses
arising from doubtful collections 4.00 Agree Minor Impact
which reduces income.
3. Prevent losses from spoilage of
Strongly
product as outputs were based on 4.27 Major Impact
Agree
budgeted amount.
4. Forecast the actual cost
3.50 Agree Minor Impact
necessary for budgeted sales.
5. Reduce its miscellaneous and
other operating. expenses arising
from the waste of cash outflows on 4.07 Agree Minor Impact
overbuying of materials and other
supplies necessary for production.
6. Reduce the operating expenses
arising from sales based on the
cash outflows affecting operations. 3.83 Agree Minor Impact
7. Sustain the volume of sales and
income based on budget cost of 3.10 Neutral Moderate Impact
goods sold.
8. Maximize profitability in sales 3.03 Neutral Moderate Impact
operation because of improvement
in cash management. 3.03 Neutral Moderate Impact
9. Improve cash returns in based
on budgeted sales activity. 3.03 Neutral Moderate Impact
10. Improve forecasting of costs
associated with selling products.
Average Mean 3.64 Agree Minor Impact
Legend: 1.00 -1.80 Strongly Disagree (No Impact)

1.81 – 2.60 Disagree (Minimal Impact)
2.61 – 3.40 Neutral (Moderate Impact)
3.41 – 4.20 Agree (Minor Impact)
70
4.21 – 5.00 Strongly Agree (Major Impact)
Table 7 presents the impact of cash fund practices on micro food
businesses in terms of cost reduction. As presented in the table, the said
cash funds practices has a major impact on the cash flow management of
the micro food businesses in terms of cost reduction. The statement which
got the highest mean of 4.53 states that the business manages to reduce
expenditures on supply materials as purchases were based on the
budgeted amount.
The results further imply that the cash fund practices of the micro
food businesses have a minor impact on their cost reduction. This means
that they manage to realize a reduction in their cost while maintaining
profitability. The micro food businesses manage to reduce the operating
expenses, sustain the volume of sales, prevent losses from spoilage of
products, and forecast the actual cost necessary for budgeted outcomes.
According to Drury (2019), Micro and Small Enterprises (SMEs) can
be achieved through operational activities with the short-term goal of
possessing good strategies and ensuring that they can achieve their
targets by selling products and services. The profitability of Micro and
Small Enterprises (SMEs) should determine the effect of cost reduction in
cash flow which vary in operating expenses, sales revenue, and marketing,
it is important not to neglect the importance of cost reduction and tear-
71
down analysis tools in helping find certain means to reduce product costs
by reducing the cost of raw materials for products the duration of running
the business has an effect on profitability.
Table 4.3.4 Cash Management

1. Segregate cash and properly allocate

3.83 Agree Minor Impact
the cash to operating expenditures.
2. Budget cash inflows and outflows on Moderate
3.40 Neutral
operation were followed. Impact
3. Record and monitor cash expense was
1.87 Disagree Minimal Impact
accounted preventing shortages.
4. Track cash flows on sales in case of Moderate
2.73 Neutral
overages or shortages of goods. Impact
5. Maintain the cash inflows and outflows
were based on budgeted expenditures
2.40 Disagree Minimal Impact
and optimized operating activities related
to sales.
Moderate
Average Mean 2.85 Neutral
Impact
Legend: 1.00 -1.80 Strongly Disagree (No Impact)
1.81 – 2.60 Disagree (Minimal Impact)
2.61 – 3.40 Neutral (Moderate Impact)
3.41 – 4.20 Agree (Minor Impact)
4.21 – 5.00 Strongly Agree (Major Impact)
Table 8 presents the impact of cash fund practices to micro food
businesses in terms of cash management. As presented in the table, the
72
said accounting cash fund practices has a moderate impact on micro food
businesses in terms of cash management. The statement which got the
highest mean of 3.83 states that the business manages to segregate cash
and properly allocate the cash to operating expenditures.
The table implies that the cash fund practices of the micro food
businesses has a moderate impact on their cash management. This
means that they were able to manage cash inflows and outflows. The
majority of the micro food businesses are somehow able to segregate cash
and properly allocate it to operating expenditures, budget cash inflows, and
track cash flows on sales.
According to the study of Abanis, Sunday, Burani, et al., (2016),
while cash management is a good and important practice, many micro and
small businesses see the operational allocation of cash movement
however SMEs did not well properly practice it to enhance the cash flow. A
major issue with cash management practices is that some businesses do
not have proper records of cash transactions to track and control their
business income and expenses.
According to Avika & Hari, et al., (2017), micro food business cash
management is crucial for describing the inflow and outflow of cash, which
refers to the movement of cash from the receiving to the payment cycle in
sales in order to maintain profitability and sustainability effective cash

73
management ensures that the business can achieve its primary objective
in the long run targeted goals and objectives by improving the allocation
and planning of its cash flow and planning for a good strategy.
4.4 The significant relationship between the socio-economic profile of

the respondents and the cash funds practices.
Table 4.4.1 Correlation between the socio-economic profile of the

respondents and the cash funds practices in terms of Book Recording
Socio-economic Profile Book Recording
in terms of:
r-value p-value Remarks Decision
Year of Operations in the .236 .209 Not significant Accept Ho
Business
Nature of the Business -.036 .852 Not significant Accept Ho
Location
Form of business
.a Cannot be
organization
computed
**. Correlation is highly significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (1
-tailed).
.a Cannot be computed (at least one variable is constant
Table 9 presents the correlation between the socio-economic profile
of the respondents and the cash funds practices of micro food businesses
in terms of book recording. The table shows that the socio-economic
74
profile of the respondents was not significantly correlated with cash fund
practices relative to book recording since the computed p-values exceeded
the 0.05 level of significance.
The results imply that the socio-economic profile of the respondents
is not significantly correlated with the cash fund practices in terms of book
recording. This means that the level of practices of micro food businesses
in recording their daily sales and expenditures does not depend on
whether the business was operating using a food cart or with a fixed store
location, and whether the business operates for over 5 years or not.

respondents and the cash funds practices in terms of Operating Activities
Socio-economic Profile Operating Activities
in terms of:
Year of Operations in the .388* .034 Significant Reject Ho
Business
Nature of the Business -.374* .042 Significant Reject Ho
Location
Form of business
.a Cannot be
organization
computed

*. Correlation is significant at the 0.05 level (1-tailed).
75
Table 10 presents the correlation between the socio-economic
profile of the respondents and the cash funds practices of micro food
businesses in terms of operating activities. The table shows that the socio-
economic profile of the respondents in terms of years of operation in the
business with a p-value of 0.034 has a significant relationship with the
operating activities practices at the 0.05 level of significance. In addition,
the socio-economic profile of the respondents relative to the nature of the
business location with a p-value of 0.042 also has a significant relationship
with operating activities at 0.05 level of significance.
in terms of years of operations in the business and nature of the business
location is significantly correlated with the cash fund practices in terms of
operating activities. This means that the level of practices of micro food
businesses in terms of operating activities depend on the length of years
they’ve operated as well as the nature type of their business as to location.
Furthermore, the longer they’ve operated and utilize a food cart type of
operation, the more they were exposed in practicing utilization of cash fund
for operations and monitor the inflows and outflows of cash from business’
operations.
This study sported by Siahaan (2018), provide research descriptively
provided description about the range of experience in managing strong
76
business. Nevertheless, generally a business person has had the
experience in management around 10 to 11 years. The level of experience
of the length of this management statistically proves significant in
increasing business earnings. The result of the analysis indicated that the
learning curve could be applied in Micro and Small Businesses people who
had managed their businesses for a long time will be able to learn the
process of production which can have the impact on the increase in
production, sale, and business activities.
Study by R Widjajanti, et al,. (2018), the statements and reasons
stated by the street vendors can illustrate that the majority of street
vendors’ food carts think the place they use is convenient for operating
activities and gathering is a place to stop the vehicle and parking lot, the
reason is because there is space on the side of the road for a stop on near
or around street sidewalk or permanent location and temporary which
security of the space are located because the location permitted by the
government, the reason for having received permission from the
government, pay retribution and order as security guarantees, the micro
food business vendors, sidewalk. Based on the explanations of street
vendors, then illustrate that although parking on the side of the road and in
the store yard that is nearby, street vendors consider there is space for
parking lot customer and visitors street vendors, it illustrates that the street
77
vendors consider the place sidewalk around the safe to be used as a place
of activity.

respondents and the cash funds practices in terms of Budgeting
Socio-economic Profile Budgeting
in terms of:
Year of Operations in the .246 .190 Not significant Accept Ho
Business
Nature of the Business -.268 .153 Not significant Accept Ho
Location
Table 11 presents the correlation between the socio-economic
profile of the respondents and the cash funds practices of micro food
businesses in terms of budgeting. The table shows that the socio-
economic profile of the respondents was not significantly correlated with
cash fund practices relative to budgeting since the computed p-values
exceeded the 0.05 level of significance.
is not significantly correlated with the cash fund practices in terms of
budgeting. This means that the level of practices of micro food businesses
in making budget allocation of cash funds for future transactions does not
depend on whether the business was operating using a food cart or with a
78
fixed store location, and whether the business operates for over 5 years or
not.
4.5 The significant relationship between cash funds practices and

the impact on the cash flow management of the micro food
businesses in terms of cash management and cost reduction?
Table 4.5.1 Correlation between cash funds practices and the impact on
the cash flow management of the micro food businesses in terms of Cost
Reduction
Cash Fund Practices of Cost Reduction
the Business
Book Recording .319 .086 Not significant Accept Ho
Operating Activities .604** .000 Highly Reject Ho
Significant
Budgeting .324 .081 Not significant Accept Ho
Table 12 presents the correlation between the cash fund
practices and the impact on micro food businesses in terms of cost
reduction. The table shows that the cash fund practices relative to
operating activities which has a p-value of 0.000 was significantly
correlated with the impact in terms of cost reduction at the 0.01 level of
significance.
79
The results imply that the cash fund practices in terms of cost
reduction has a highly significant relationship on the impact on micro food
business in terms of operating activities. This means that since most of the
micro businesses sometimes practice utilization of cash fund for operations
and monitor the inflows and outflows of cash from business’ operations,
they’ve had managed to reduce the operating expenses, sustain the
volume of sales, prevent losses from spoilage of products, and forecast the
actual cost necessary for budgeted outputs. It further implies that the more
the business practice utilizing cash funds for operations, the more they will
likely to fully manage the reduction of cost while increasing its profitability.
According to (Burja, 2017), the proper organization of operating
activities should be aimed at the efficient use of cash funds. When the
efficiency of utilization of cash funds increases the overall result will be a
higher earning. Company’s profitability can be increased by speeding the
rotation of its own capital from operations. Furthermore, the efforts of
reducing all operating expenses had a substantial impact on enhancing
profitability.
80
Table 4.5.2 Correlation between cash funds practices and the impact on
the cash flow management of the micro food businesses in terms of Cash
Management
Cash Fund Practices of Cash Management
the Business
Book Recording .356 .054 Not Significant Accepted Ho
Operating Activities .565** .001 Highly Reject Ho
Significant
Budgeting .511** .001 Highly Reject Ho
Significant
Table 13 presents the correlation between the cash fund practices
and the impact on micro food businesses in terms of cash management.
The table shows that the cash fund practices relative to book recording
with a p-value of 0.054, operating activities with a p-value of 0.001, and the
budgeting practices with a p-value of 0.001, was significantly correlated
with the impact in terms of cash management at the 0.01 level of
significance.
The results imply that the cash fund practices in terms of operating
activities and budgeting has a highly significant relationship on the impact
on cash flow management of the micro food business in terms of cash
management. This means that since most of the micro businesses never
81
practiced recording their day-to-day transactions in relation to the
movement of their cash, sometimes practice utilization of cash fund for
operations and monitor the inflows and outflows, fully practicing making
budget allocation of cash fund for future transactions they’ve somehow
able to segregate cash and properly allocate it to operating expenditures,
budget cash inflows, and track cash flows on sales.
According to the study of Nordmeyer, Bobitan & Mioc, et al., ( 2017),
since the majority of SMMEs business largely prefer cash budget
management initiatives as key financial performance measures, it is no
surprise that most SMME leaders deem cash management initiatives as
‘lifelines’ for their respective businesses to remain in existence. Cash
management initiative which can be implemented by SMMEs is that of a
cash budget. In essence, a cash budget can be viewed as the plan of a
business’ decision makers as to how the ‘cash on hand situation’ of the
particular business should appear throughout a given financial period.
Cash budgets, it should be noted that they do not provide a permanent
outlook on the financial situation of a business, but rather provide insight
that is available to assist in the tracking and limiting of the spending of
funds to pursue profitable businesses many SMME leaders have limited
knowledge of cash budgets and, as a result, they do not take into
82
consideration plausible changes in the market which may directly impact
their overall financial situation.
Problem 4.6 What recommendations can be designed based on the
results of the study?
Rationale: Cash Management and Budgeting seminar for micro food
businesses could help them in properly managing cash flow, and sales
transactions in terms of profits and expenses and budgeting the cash in
terms of operating activities running their business enhancing the cash
cycle. Furthermore, micro businesses could have proper insight and
practice of cash management and budgeting had effects on their
businesses in the long term run of business. This activity could help food
micro businesses to better acknowledge the importance of accounting for
cash fund.
General Objectives:
At the end of the seminar, the participants, specifically the
respondents to this study, will be able to:
 Increase their knowledge of the level of practice in cash
management in terms of money utilization that will increase
the efficiency of cash budget in order to forecast cash inflows
83
and outflows, reduce cost risk and enable cash forecast for
expenses and sales in future activities
 Comprehend the impact of accounting for cash funds to their
business in cash management practices.
Matrix of Seminar and Awareness Orientation Program
Needs Objectives Time Materials Person Success

Frame Needed Involved Indicators
1. To exercise
Understanding the
the importance importance of
of budgeting budgeting in
and cash business’
management operations
and the
importance of Session
cash hall, sound
management system,
in cash flow. chairs, and
2. Application To other Book
of budgeting understand learning keepers,
and cash the benefits materials, Cost
management and Bulletin Accountant/
on micro importance of Board, Certified
businesses budgeting Flyers, and Public
and cash pamphlets Accountant,
management Micro
of its effects business
on operation owners.
of the
business.
3. Practices on To conduct a
Accounting for program that
Cash funds to promotes
be applied for understandin
budgeting and g on a cash
84
cash forecast
management actual
expenses
and for
seeing profits
in the
business for
operation
Sample Program
Master of Ceremony: Alexis A. Catalbas, Analy Gedaro & Manicar

Llanes
Time Event Responsible Person
7:00 - 8:30 AM Registration Berverly Joy Arco
Florence Opay
8:30 - 8:35 AM Opening Prayer
Perocho
8:45 - 9:00 AM Welcome Address Franklin Mendoza
Introducing Guest
9:00 - 9:15 AM Master of Ceremony
Speakers
Overview On
9:15 - 10:00 AM Lemuel Catalbas MBA
Budgeting
Implementation of
10:00 - 12:00 AM Sherwin De Oro, CPA
Cash Management
12:00 - 1:00 PM LUNCH BREAK
Budgeting and Cash
1:00 - 3:00 PM Sherwin De Oro, CPA,
Management Practices
3:00 - 3:15 PM Giving of Certificates Master of Ceremony
3:15 - 3:30 Closing Remarks Sanda Armada
Evaluation
Name (optional):
Title of the Program:
85
Instruction: Please check the number corresponding to how you rate the
seminar and workshop program based on each item. The ratings are as
follows:
5 = Highly Satisfied
4 = Moderately Satisfied
3 = Satisfied
2 = Poorly Satisfied
1 = Dissatisfied
I. Registration
Punctuality 5 4 3 2 1
a. time the registration started
b. registration process
c. registration booth
Physical Set-up 5 4 3 2 1
a. ventilation
b. provided enough seats
c. systematize and organized entrance
and exit
Lights
a. adequate for the stage set-up
b. proper brightness and contrast
Sound
a. audible and clear
b. appropriate to the theme
Topic 5 4 3 2 1
a. relevance to the title
b. interesting to the audience
c. informative
Series of Events
a. well organized
b. started on time
IV. Speaker
86
Mastery of the Topic 5 4 3 2 1
a. knowledgeable enough
b. ability to answer the questions
Discussion
a. spontaneous flow
b. clear and audible
c. well understood
d. words used were easily understood
V. Food
5 4 3 2 1
a. Snacks
b. Lunch
Comments/ Suggestions:
CHAPTER 5
SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS
This chapter presents the summary, conclusions, and recommendations of
the study.
5.1 Summary of Findings
1. The majority of the micro food business in Maranding Lala Lanao Del
Norte operates between 1 to 5 years of operation that they manage of
87
selling their products in designated areas of public space that is permitted,
products offered were prepared food, services to customers.
2. The majority of the micro food business owned food carts in the area
were in operation selling and offer services are using food carts.
3. The majority of the micro food business in the area owned by a single
proprietor since it is the most common form and easy to organize and
operates than any other form of business were sole proprietorship
businesses.
4. The majority of the micro food businesses never practiced the book
recording in cash fund practices their day-to-day transactions in relation to
the movement of their cash as well as the income and sales they’ve
realized.
5. The majority of the micro food businesses moderately practiced cash
fund practices in terms of operating activities that they moderately practice
the utilization of cash funds for operations and monitor the inflows and
outflows of cash from business operations.
6. The majority of the micro food businesses always practiced cash fund
practices in terms budgeting that they were fully practicing making the
88
budget allocation of cash funds fund for future transactions and properly
forecasted the future demand and supply of goods that they will produce.
7. The majority of the micro food businesses practice the cash fund
practices were barely able to manage to reduce cost in the operating
expenses, sustain the volume of sales in their cost while maintaining
profitability.
8. The majority of the micro food businesses practice cash funds has a
moderate cash management that they able to manage properly allocate it
to operating expenditures, budget cash inflows, and track cash flows on
sales.
9. The majority of the micro food in terms of the socio-economic profile of
the respondents is not significantly correlated with the cash fund practices
in terms of book recording. This means that the level of practices of micro
food businesses in recording their daily sales and expenditures does not
depend on whether the business was operating using a food cart or with a
fixed store location, and whether the business operates for over 5 years or
not.
10. There is no significant relationship between the socio-economic profile
of the respondents and cash fund practices in terms of book recording. the
level of practices of micro food businesses in recording their daily sales
and expenditures does not depend on whether the business was operating
89
using a food cart or with a fixed store location, and whether the business
operates for over 5 years or not.
11. There is significant relationship between the socio-economic profile of
the respondents and the cash fund practices in terms of years of
operations in the business and nature of the business location is
significantly correlated with the cash fund practices in terms of operating
activities. The level of practices of micro food businesses in terms of
operating activities depends on the length of years they’ve operated as
well as the nature type of their business as to location. Furthermore, the
longer they’ve operated and utilized a food cart type of operation, the more
they were exposed in practicing utilization of cash fund for operations and
monitor the inflows and outflows of cash from business’ operations.
12. The is no significant relationship between the socio-economic profile of
the respondents and cash fund practices in terms of budgeting. The level
of practices of micro food businesses in making budget allocation of cash
fund for future transactions does not depend on whether the business was
operating using a food cart or with a fixed store location, and whether the
business operates for over 5 years or not.
13. There is significant relationship between cash fund practices in in
terms of cost reduction. The level of practice since most of the micro
businesses moderately practice utilization of cash fund for operations and

90
monitor the inflows and outflows of cash from business’ operations, they’ve
had managed to reduce the operating expenses, sustain the volume of
sales, prevent losses from spoilage of products, and forecast the actual
cost necessary for budgeted outputs. It further implies that the more the
business practice utilizing cash fund for operations, the more they will likely
to fully manage reduction of cost while increasing its profitability.
14. There is significant relationship between operating activities and
budgeting of the micro food business in terms of cash management. The
level of practice of the micro businesses has direct effect of cash
management even they had never practiced recording their day-to-day
transactions in relation to the movement of their cash, moderately
practices utilization of cash fund for operations and monitor the inflows and
outflows, fully practicing making budget allocation of cash fund for future
transactions they’ve somehow able to segregate cash and properly
allocate it to operating expenditures, budget cash inflows, and track cash
flows on sales.
5.2 Conclusion
The main purpose to this study to determine the effective cash fund
practice of the micro food business in Maranding Lala Lanao Del Norte its
impact of the cash flow management of financial performance in micro
food businesses and specifically, it seeks to determine the socio-economic

91
profile of the respondents in terms of years of operation in the business,
nature of business location, form of business organization, and accounting
cash fund practices in terms keeping also an accurate record of all
business transactions concerning sales, with proper disclosures thereof,
could have a great influence on cash flow management’s decision-making.
In addition, accurate accounting records are a dependable measure of
operating activities, of the business and make budget allocation, to reduce
cost and maximize profitability and cash management that can help the
business produce a positive cash flow management.
profitability.
The research design used in this study was the descriptive-
correlation research design which involved collection of data in order to
answer the questions exploring the impact of cash flow manage for cash
fund practices on micro food business businesses. The respondents of the
study were the micro food business owners and/or employees of the
business. The number of respondents needed by the researchers to
complete this study was 30 micro businesses; they were chosen using
stratified sampling and were needed to come up with meaningful results
and to really determine the exact relationship.
The results entailed that there is significant relationship between the
socio-economic profile of the respondents in terms of years of operation in

92
the business, the nature of business location is significantly correlated with
the cash fund practices in terms of operating activities. This means that the
practices of micro food businesses in terms of operating activities depend
on the length of years they’ve operated. The majority of micro food they
operate 1-5 years as well as the nature type of their business as to location
dominantly owned by a sole proprietorship. Furthermore, the longer
they’ve operated and utilized food cart type of operation, the more they
were exposed in practicing the utilization of cash funds for operations and
monitoring the inflows and outflows of cash flow management from
business operations.
Moreover, the results revealed that there is a significant relationship
of cash fund practices in terms of operating activities, and budgeting has
direct impact in terms cost reduction and cash management. This means
that since most of the micro businesses moderately practice utilization of
cash fund for operations and monitor the inflows and outflows of cash from
business’ operations, they’ve had managed to reduce the operating
expenses, sustain the volume of sales, somehow able to segregate cash
and properly allocate it to operating expenditures, budget cash inflows, and
track cash flows on sales.
In addition, Cash Flow Theory according to (Huseyin, 1991), states
that cash management states that management is in charge of storing
93
cash to obtain control over it and make investment decisions that may
have an impact on a corporate unit. Furthermore, the Cash Management
Accounting Theory by Hutchison (2007), the practice of collecting and
managing cash to ensure that business entities have the best possible
cash balances is known as cash management. The goal of cash
management is to make sure that corporate organizations always have
enough cash on hand and that any surplus is put to good use.
In lining up with the present study, micro-food businesses should
understand the concept of cash flow and cash funds accounting methods
to aid liability and measure business profitability. This will enable them to
base their work on the precise financial performance of the micro-food
business and will assist business owners in understanding the financial
situation of their businesses. Additionally, it provides information for
defining financial goals, developing bookkeeping skills, and making
general strategic judgments and income targets.
5.3 Recommendations
Based on findings and conclusions of the study, the following are the
researcher’s recommendations:
94
Entrepreneurs. That, entrepreneurs, may utilize this study about their
level of practices on accounting for cash funds of their operation which will
serve as an effective basis for changes and improvement on the
operations to monitor the financial performance of its respective
businesses. It will also provide them with knowledge about effective cash
management which will serve as the key to achieving long-term goals.
Micro food business. This research will offer information on how
accounting for cash funds helps micro food businesses may provide them
the opportunity to enhance their skills in the proper allocation of cash in the
micro food business in terms of budgeting and operating activities that may
result in good cash management and accounting procedures used in their
business in relation to revenue, profitability, and how they obtained money
to fund their operations. Additionally, it benefits the owners by teaching
them how to effectively record transactions for future employment.
Accountancy Students. The researcher will offer that students can learn
about the application of accounting for cash funds and cash flow
management play a role in terms of budgeting and operating activities on
an entity's financial performance by taking this course. They will learn how
important this section of the accounting topic is in actual application on
businesses that they may encounter while practicing their profession.
95
Future Researchers. Future academics interested in doing studies on the
same issues will benefit from knowing about this study as a stepping
stone. It provides details on how the micro food business applies cash
funds and cash flow management on operations, that affect their financial
performance of the business and to pursue a wider and more in-depth
study-related subject.
96
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.
APPENDIX A
100
TRANSMITTAL LETTERS
NORTH CENTRAL MINDANAO COLLEGE

Formerly: Central Mindanao Technical Institute
Maranding, Lala, Lanao Del Norte
“Excellence, Service & Quality - TO GOD BE THE GLORY”
COLLEGE OF ACCOUNTANCY
101
March 17, 2023
REY M. LAGRADA, MSEE, REE, RME
Maranding. Laia, Lanao del Norte
Sir:
We, the researchers from the College of Accountancy are presently conducting research
entitled “ACCOUNTING FOR CASH FUNDS ITS IMPACT ON THE CASH FLOW
MANAGEMENT OF MICRO FOOD BUSINESSES.”
In line with this, we are humbly asking your permission to allow us to conduct our
descriptive study at Maranding, Lala, Lanao del Norte as part of our requirements for our
accounting research.
We hope for your kind consideration.
Thank you very much!
Respectfully yours,
(SGD) MANICAR G. LLANES (SGD) ALEXIS A. CATALBAS ( SGD) ANALY D. GEDARO

Researcher Researcher Researcher
Noted by:
(SGD) KERNEL EDD DOMENEQ P. ARNOCO-NAGAC, MBA, LPT

Research Adviser
Recommending Approval:
(SGD) GREGORIA G. UNGAB, CPA, MPA, MHRM

Dean, College of Accountancy
Approved by:
(SGD) REY M. LAGRADA, MSEE, REE, RME

Chairman
Maranding Lala, Lanao del Norte
102
Letter to the Respondents
Ma’am/Sir,
Good day!
We, Analy D. Gedaro, Alexis A. Catalbas and Maricar G. Llanes are 3 rd
year students under the program of Bachelor of Science in Accountancy from
North Central Mindanao College, who are currently conducting a study
“Accounting For Cash Funds Its Impact On The Cash Flow Management Of
Micro Food Businesses.”
Rest assured that any information will be kept confidentially and used
solely to academic reasons. We sincerely hope for your utmost consideration
regarding this humble request. Thank you and May God bless you!
Respectfully yours,
MANICAR G. LLANES ALEXIS A. CATALBAS ANALY D. GEDARO
Researcher Researcher Researcher
Noted by:
MS. KERNEL EDD DOMENEQ A. NAGAC, MBA, LPT

Research Adviser/ Instructor
MRS. GREGORIA G. UNGAB, CPA, MBA, MHRM

Dean, College of Accountancy
APPENDIX B
103
QUESTIONNAIRE
NORTH CENTRAL MINDANAO COLLEGE
104
DEPARTMENT OF ACCOUNTANCY
S.Y 2022-2023
SURVEY QUESTIONNAIRE
ACCOUNTING FOR CASH FUNDS: IT’S IMPACT ON THE CASH
FLOWS MANAGEMENT OF MICRO FOOD BUSINESS
Part 1: SOCIO-ECONOMOMIC PROFILE
Direction:
Please answer the following items honestly, conscientiously, and
accurately. Check the box if they accordingly correspond to your answer.
1. Years of operation in the business 3. Form of business
organization
1-5 years Sole proprietorship
6-10 years Partnership
11 years and
3. Nature of Business Location

Food Cart
Fix store Location
Others specify: _________________
PART II. ACCOUNTING FOR CASH FUNDS

105
Direction: Check the box that corresponds to the level of frequency on the
following statements. Use the scale below
Legend
5 Always
4 Often
3 Sometimes
2 Rarely
1 Never
BOOK RECORDING 5 4 3 2 1
1. The business make record day-to-day
transaction of the business that involves cash
fund and operating activities track profit and
loss, business expenses, and cash flow.
2.The business carefully record and ensure

the correct amount in the sales and expenses
on operating activities.
3. The business separate records of cash

inflow and outflow transactions of expense
and income in cash flow.
4. The business adjustment entries of the
106
transaction recognized the credit and debit on
a cash basis and accrual basis.
5. The business usually do posting of record
transactions to General Ledger
OPERATING ACTIVITIES 5 4 3 2 1
1. A separate cash fund is properly segregated
solely for activities and operations.
2. The business firm does check the cash flow
operation of transactions activities from the
business.
3. The business firm do practices monitor cash
inflow and outflow operations from book recording
transactions.
4. The business does customize budgeted cash
fund allocations in operating activities.
5. The business determines the cash receipts from
operations are separately recognized.
BUDGETING 5 4 3 2 1
1. The business firm make a budget allocation of

cash fund for future transactions of overhead
expense.
2. The business firm properly forecasted the future
demand and supply of goods that I produce or sell.
3. The business firm does track money spending
to create a solid sales budget plan.
4. The business firm does money allocation in a
business sales transaction for cash flow operating
activities.
5. The business firm carefully tracks income and
expenses in a month to determine current
spending levels.
107
PART III. ITS IMPACT ON THE CASH FLOW MANAGEMENT OF
MICRO FOOD BUSINESS
Direction: Please put check on the level of agreement that corresponds to
your answer.
Legend
Likert Scale
5 Strongly Agree
4 Agree
3 Neutral
2 Disagree
1 Strongly Disagree
COST REDUCTION 5 4 3 2 1
The Business firm practice
1. Cash fund operation forecast cash to cover
minor expenditures to improve cash
management in profitability.
2. The business cash sales prevented the risk
on losses arising from doubtful collections
which reduces income.
3. The business’s financial performance
improved cash inflows management.
4. The business makes forecast cash fund on
operating activities financial performance
improves with cash inflows management.
5. The business firm applied cash fund
expenditure as cash outflows to improve
through liquidity to cash profitability
management operations.
6. The business firm expenses are forecasted
and budgeted based on the cash outflows
affecting operations.
108
7. The business firm segregates cash funds
on cash management allowing proper
allocation of costs and expenses.
8. The business make sure cash outflows
were properly matched with generated
income to maximize profit while reducing the
related operating expenses.
9. The business firm applied accounting cash
fund adheres to effective cash management
and reduction of overhead expenses.
10. The business cash flow management
allowed forecasting costs associated to
selling products.
COST REDUCTION 5 4 3 2 1
The business
1. Abled to reduce expenditures on supply
materials as purchases were based on
budgeted amount.
2. Abled to prevent the risk of losses arising
from doubtful collections which reduces
income.
3. Abled to prevent losses from spoilage of
product as outputs were based on budgeted
amount.
4. Abled to forecast the actual cost
necessary for budgeted sales.
5. Abled to reduce its miscellaneous and
other operating expenses arising from the
waste of cash outflows on overbuying of
materials and other supplies necessary for
production.
6. Abled to reduce the operating expenses
arising from sales based on the cash outflows
affecting operations.
7. Abled to sustain the volume of sales and
income based on budget cost of goods sold.
8. Abled to maximize profitability in sales
operation because of improvement in cash
management
109
9. Abled to improve cash returns in based on
budgeted sales activity.
10. Able to improved forecasting of costs
associated with selling products.
CASH MANAGEMENT 5 4 3 2 1
The business
1. Abled to segregate cash and properly
allocate the cash to operating expenditures
2. Abled to budgeted cash inflows and outflows
on operation were followed.
3. Abled to record and monitor cash expense
was accounted preventing shortages
4. Abled to tracked cash flows on sales in case
of overages or shortages of goods
5. Abled to maintain the cash inflows and
outflows were based on budgeted expenditures
and optimized operating activities related to
sales.
APPENDIX C
CERTIFICATES
110
111
100
101
APPENDIX D
DOCUMENTATIONS
102
102
103
APPENDIX E
CASE STUDY
104
Case Study 1
1. Title/Name of Business
Cash Fund practices Joys Maderal Gallego Chicken Proben
2. Objectives
The case study aims to determine the following:
 To determine how the micro food business applies some accounting
practices managing their cash flow in the long run of the operation
running the business.
 To determine what business practices are in terms of cash records,
cash basis, or accrual basis.
 To determine the Current practices of Cash funds practice in years of
operation in terms of Book records, Budgeting allocation, and Cash
management
 To determine how businesses are able to survive by these practices in
years of operation by rendering service and selling products to
customers.
Identification of Problems
During the course of interview, the following problems in relation with
cash fund practices realized by “Joy Chicken Proben” were identified:
105
 Mrs. Joy Gallego does not record day to day sales transaction
related to his business
 Mrs. Joy Gallego does not monitor or track cash flow movement of
the business
 The business Does not recognize the expenses of operating
activities as part of the operation of the business.
 Mrs. does not practice accounting accrual based in terms of cash
recognition
During the interview "Joys Maderal Gallego Chicken Proben," Mrs. Joy
Gallego, a sole proprietorship 37 years old, lives in Purok 6, Pinoyak Lala
Lanao Del Norte. Married, they had two kids, and they started their
microfood business in 2016 with cash on hand capital of 80, 000 pesos,
including food cart mobile materials, supplies, and goods that they needed
for production in cash. Mrs. Joy said that at the beginning of the business,
they record all cash that relates to sales, such as budgeting, operating
activities, and cost, but she said it has a purpose just to know the range of
profit of sales and decide to stop records because it is time-consuming
during operation. The reason she did not record sales was that they had
no bank account to monitor their sales. However, if Mrs. Joy does not
106
properly practice book recording in sales, it may result in poor cash
management.
Alternative Courses of Action
The following actions and strategies were done by the ““Joy Chicken
Proben” in solving the problems encountered in relation to cash flow
managent:
 For transparency of the cash, they record in small notebook all cash
inflows and outflows to determine the correct amount and the timing
of records of cash this serves as a record to their business
 For cash monitoring Mrs. Joy first recognized first the capital, income
less expense to determine profits to avoid shortages for the next
operation for smooth rolling capital these serves as cash flow
monitoring
 Mrs. Joy recognizes ending net income plus cash receipts less
expenses these serve as operational cash flow of Mrs. Joy to
determine the current spending level.
 Mrs. Joy used a cash basis practice for simple recognition of cash
movement of the cash instead of an accrual basis
Key Findings
107
The cash funds practice realized by “Joy Gallego Joy Chicken
proben” affected the business all throughout its operations. In the case of
Mrs. Joy Gallego is shown practice cash basis but m taking risks with the
informal way of cash funds practices in terms of the book recording
operating activities, budgeting monitoring, cash flow lack practice will result
from poor cash management however they able to survive for short term
goal by these practices long term operation without tracking cash flow.
Findings of the study of Joy Gallego shows short way to determine
the cash flow and whether they are profitable or not by computing profits
they do this equation to determine the profitability of the business.
Equation formula
(Total Revenue - Total Expenses = Profit.) or (Capital – Expenses +
Income = Profit)
To calculate total the revenue multiplied by number of units sold price of
each item
(“TR= Q X P”) where “TR” stands for total revenue “Q” stands for
Quantify, and “P” stands for price for price. The number of units you
determine here provides the total revenue when you multiply the average
cost of your products.
To calculate Total expenses = Net Revenue – Net Income

108
Recommendation
This study serves knowledge to micro food business owners as a
guide for proper accounting cash fund practices in terms of budgeting,
maximizing profits, and operational cash flow by offering service selling,
and products to customers
must practice cash allocation cash realization and proper records of cash
basis to gauge budgeting to reduce the cost
The researcher believes that these practices can help the micro food
business get positive cash flow decision-making for another long-term
operation.
109
Case Study 2
Title/Name of Business
Cash Fund practices Jessa Eatery House Maranding
Objectives
 To determine how the micro food business applies some accounting
practices managing their cash flow in the long run of the operation
running the business.
 To determine what business practices are in terms of cash records,
cash basis, or accrual basis.
 To determine the Current practices of Cash funds practice in years
of operation in terms of Book records, Budgeting allocation, and Cash
management
 To determine how businesses are able to survive by these practices
in years of operation by rendering service and selling products to
customers.
110
Brief Background of the Study
Jessa Eatery House street vendor, 46 years old, lives in Rebe, Lala
Lanao Del Norte, married, has 4 kids, and started their micro food
business in 2021 with cash on hand, 250,000 pesos in the capital,
including a permanent location located in Purok Tugas, including
equipment, materials, supplies, and goods that are needed for
production. Mrs. Jessa spent the money to start the business. However,
in the middle of the operation, running their business, one of the main
reasons they stop for a while is because the volume of sales is low. One
of the factors is business location, but the business continues to operate
because they do not properly execute the components of accounting
cash fund practices in the business because the rolling cash capital
cannot be returned for the next operation because expenses do not
record all of the cash movement. It is so hard to track cash flow that
businesses experience unexpected expenses that result in bankruptcy.
Mrs. Jessa said in the first place, at the beginning of business, they
record all cash that relates to sales, but she said it has a purpose just to
know the range of profit of sales. She stops recording because it is time-
consuming during sales transactions, and the operation is the reason why
111
she did not record sales transactions. They thought it had the same
process as buying and selling and had the same profits.
Identification of problems:
 Does not record day-to-day sales transaction
 Does not monitor or track cash flows
 Does not recognize accounting accrual basis
Alternative course of action:
 The business only records all the sales and expenses and end of the
operation only this only serves book recording to them.
 Mrs. Jessa servers monitor the terms cash flows and realize first all
cash inflow and outflow to avoid shortages for the next operation for
smooth rolling capital.
 Mrs. Jessa only recognized only the cash receivables and less
payments and expenses and income
 Mrs. Jessa practices only accounting cash basis for cash recognition
in terms of monitoring cash flow.
Key Findings
In the case of Mrs. Jessa, it is shown that their cash basis is informal, but
their business is taking risks with the informal way of cash fund practices
in terms of the book recording operating activities, budgeting monitoring,
112
and cash flow. This lack of practice will result in poor cash management,
but they are able to survive for short-term goals by using these practices
for long-term operations without tracking cash flow. However, Jessa
Eatery’s business experienced a financial crisis due to shortages and bad
cash flow practices, which greatly affected the performance of the
business, specifically its earnings. determine the profitability of the
business, but she said business owners don’t feel entirely confident when
it comes to things like accounting and managing business finances.
Despite the fact that the business absorbed a huge amount of loss, it was
still able to continue its operation.
Recommendation
This study serves as knowledge for micro food business owners as a
guide for proper accounting cash fund practices in terms of budgeting,
maximizing profits, and operational cash flow. By offering services and
products to customers, unexpected problems may arise that may result in
poor cash management.
The owners must practice cash allocation, cash realization, and proper
budgeting to reduce costs. The researcher believes that these practices
can help the microfood business get positive cash flow decisions for
another long-term operation.
113
ALEXIS A. CATALBAS
Address: Tenazas, Lala, Lanao Del Norte
Cellphone No.: 09302344663
E-mail Address: [email protected]
PERSONAL DATA
Age : 21
Sex : Male
Civil Status : Single
Height : 155 cm
Weight : 50 kg
Date of Birth : April 20, 2002
Parents : Carlito C. Catalbas & Jocelyn A. Catalbas
EDUCATIONAL BACKGROUND
Undergraduate – Bachelor of Science in Accountancy

High School
North Central Mindanao College High School
114
Date of Graduation: April 2020
Elementary School
Deogracias Memorial Elementary School
Tenazas Lala, Lanao Del Norte
WORK EXPERIENCE
Graphic Artist
Worship Team Technical Operator
Infographics / Photographer
Part time Film Editor
ANALY D. GEDARO
Address: Linamon, Lanao Del Norte
PERSONAL DATA
Age : 22
Sex : Female
Civil Status : Single
115
Height : 168 cm
Weight : 54 kg
Date of Birth : April 24, 2001
Parents : Marcelino B. Gedaro & Emerly D. Gedaro
Maranding, Lala, Lanao Del Norte High School
High School
Masters Technological Institute of Mindanao Iligan City
Elementary School
Guillermo P. Canoy Memorial School
Poblacion, Linamon, Lanao Del norte
WORK EXPERIENCE
Modeling
Admin of Aubreyswardrobe liveselling.
116
MANICAR GASCON LLANES
Address: HINAPLANON ILIGAN CITY, Lanao Del Norte

PERSONAL DATA
Age : 39
Sex : Female
Civil Status : Married
Height : 160 cm
Weight : 65kg
Date of Birth : July 18,1983
Parents : Constancio Manolo L. Gascon & Carmen
S.Gascon
College Grad. Beed Saint Peters College
Iligan City March 26, 2004
High School
Iligan City National High School Iligan City, Lanao Del Norte
Date Of Graduation: March 2009
Elementary School
Iligan City Central School Iligan City, Lanao Del Norte
Date Of Graduation: March 1990
WORK EXPERIENCE
Government Employee
Bureau of Internal Revenue Iligan City
117

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ACCOUNTING FOR CASH FUNDS: ITS IMPACT ON THE CASH FLOW

MANAGEMENT OF MICRO FOOD BUSINESSES

BACHELOR OF SCIENCE IN ACCOUNTANCY

MANAGEMENT OF MICRO FOOD BUSINESS

The Research Committee of the

North Central Mindanao College

Maranding, Lala, Lanao del Norte, Philippines

of the Requirements for AE 8 (Accounting Research 2)

Leading to the Degree of

Bachelor of Science in Accountancy

In partial fulfillment of the requirements for AE 8 (Accounting

KERNEL EDD DOMENEQ P. ARNOCO-NAGAC, MBA, LPT

Approved in partial fulfillment of the requirements for AE 8

FERDIE P. MENDOZA, MBA GREGORIA G. UNGAB, CPA, MPA, MHRM

REY M. LAGRADA, MSEE, REE, RME

Keywords – Book recording, Budgeting, Operating Activities, Cost

This study is wholeheartedly dedicated to the researcher’s beloved

spiritual, emotional, and financial support.

To their Adviser, brothers, sisters, relatives, mentors, friends, and

classmates who shared their words of advice and encouragement to finish

The researcher cannot express our gratitude; we are extremely

final outcome depend on it.

We would especially like to thank Mrs. Kernel Edd Domeneq Arnoco

To the Dean of the College of Accountancy, Mrs. Gregoria G. Ungab, CPA,

Secondly, we would like to thank also to our parents, teacher,

corporate prayer for us was what sustained us this far.

throughout this study. which enabled us to conclude the research

effectively. We will keep on trusting you for our future.

LIST OF FIGURES xiii

1.1 Background of the Study 1

1.2 Theoretical Framework 6

1.3 Conceptual Framework 11

1.4 Statement of the Problem 13

1.7 Significance of the Study 16

1.8 Definition of Terms 17

REVIEW OF RELATED LITERATURE

2.1 Related Literatures 21

2.1.1 Cash Management Practices Overview 21

2.1.2 Accrual Accounting vs.

Cash Basis Accounting Overview 22

2.1.3 Book Recording 24

2.1.4 Operating Cash flow Using

Accrual-Based and Cash-Based 25

2.1.5 Operating Activities 26

2.1.6 Cash Budget 27

2.1.7 Cash Inflows 28

2.2 Insights Learned from Related Literatures 34

2.3 Related Studies 36

2.3.1 Cash Management Practices Micro and Small Business 36

2.3.2 Cash flow Management-Based Financial Performance 37

3.1 Research Design 40

3.2 Research Environment 42

3.3 Respondents and Sampling Procedure 44

3.4 Research Instrument and their Validity 44

3.5 Data Gathering Procedure 46

3.4 Statistical Treatment 48

RESULTS AND INTERPRETATION

4.1 The Socio-economic Profile of Respondents 49