ACCOUNTING PRACTICES AND FINANCIAL PERFORMANCE OF MANUFACTURING COMPANIES

Abstract

Accounting practices are vital for managing financial records, ensuring transparency, and promoting accountability in business operations. For Manufacturing Companies, effective accounting practices are crucial for enhancing financial transparency, accessing financing, and improving overall business performance. In Nepal, Manufacturing Companies face challenges in adopting and implementing robust accounting systems due to limited resources, inadequate training, outdated accounting systems, and external pressures. This study investigates the factors influencing accounting practices among Manufacturing Companies in Nepal, specifically focusing on accounting knowledge, system type, compliance with NFRS. Using a descriptive and exploratory research design, data were collected from 385 respondents through structured questionnaires. Descriptive statistics were used to analyze demographic information and survey responses, while multiple linear regression analysis tested the relationships between variables. The findings reveal that accounting knowledge, accounting system type, and NFRS compliance significantly impact accounting practices in Manufacturing Companies. Enhanced accounting knowledge and the adoption of computerized systems improve financial reporting accuracy and efficiency. Compliance with NFRS promotes transparency and credibility in financial statements, driving effective practices. The study concludes that improving accounting practices is essential for enhancing the financial management capabilities of Manufacturing Companies in Nepal. Addressing challenges such as inadequate accounting knowledge and reliance on outdated systems, while leveraging factors like standardized practices and NFRS compliance, can significantly improve financial transparency, access to financing, and overall business performance. These improvements will contribute to the growth and sustainability of Manufacturing Companies in Nepal. The findings highlight the need for Manufacturing Companies to prioritize accounting education and training, adopt suitable accounting systems, and comply with financial reporting standards. Policymakers and educational institutions should support Manufacturing Companies through targeted training programs and resources to enhance accounting literacy and compliance with national and international standards. By understanding these factors, Manufacturing Companies can strengthen their financial management capabilities,

attract investment, and contribute to sustainable economic growth and development in Nepal.