UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

Molino Campus
COLLEGE OF ACCOUNTANCY
Chapter 2
METHODOLOGY
This chapter discusses the methodology of the study on the Assessment
of Factors Affecting Tax Compliance of SMEs in Molino, Bacoor City, Cavite.
It aims to define and discuss in detail the methods of gathering and analyzing
data of the study. Specifically, it includes research design, data-gathering
procedure and statistical treatment of data.
Research Design
This study employed qualitative and quantitative research design that
enabled collection of requisite information about the factors that affect the tax
compliance among Small and Medium Enterprises. This type of research is
conclusive in nature which gathers information that can be used for statistical
inference on your desired respondents through data analysis (Fluid Survey
University).For this mixed qualitative and quantitative form of research, the
researchers made used of a descriptive survey for the data and informationgathering of the research to answer the questions that will be used to analyze
the factors that affect tax compliance.
Population Sampling
The target population was derived from the small scale business
operators deemed knowledgeable of basic tax laws and policies. To ensure fair
representation of the target population, the selection of Small and Medium
Enterprises, from which to pick samples, was done using both purposive
sampling and simple random sampling. Minimum sample size of 30
respondents was proportionately selected from the target population to
participate in the study.
Respondents of the Study
Participation in this study was voluntary and each of the enterprises
gave consent to the procedures of the survey and interview. The population of
the study are the 50 registered SMEs in Molino, Bacoor City, Cavite. The
researchers used the sampling technique of the Slovins formula. The sample
size calculated from the said formula is eighty-seven (33). The respondents of
this study are the restaurant owners, small scale professional practitioners such

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

Molino Campus
COLLEGE OF ACCOUNTANCY
as

Lawyers,

Accountants,

Debt

collectors,

Property

agents,

and

Telecommunication shop owners because they possess professional competence

to give answers enough to impact and influence to represent the whole
population.

Research Instruments
To obtain effective and well-organized data for the study from the
respondents, valid questionnaires are given to them to be answered. A
questionnaire is a set of systematically structured questions used by a researcher
to get need information from the respondents (Dr. Ododa and Onganya). The
questionnaire used in this study was adapted from a foreign study which has the
same concept. The first part of the survey questionnaire is composed of the
company profile name of business, capital, type of business, number of years
the company has been operating, and number of employees working in the
establishment. The second part is the adapted questionnaire from the foreign
study entitled, An Analysis of Factors Affecting Tax Compliance in the Real
Estate Sector in Kenya: A Case Study of Real Estate Owners in Nakuru Town.
The study discusses the factors that affect tax compliance in Kenya.
Another instrument this study has used along with the survey
questionnaire is interview. A semi-structured personal interview with some key
personnel of the respondents was conducted. A semi-structured interview
includes a number of planned questions, but the interviewer has more freedom
to modify the wording and order of questions.

Data-Gathering Procedure
Primary data was collected at source by the researcher through direct
communication with the respondents using questionnaires. The major sources

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

Molino Campus
COLLEGE OF ACCOUNTANCY
of this data are extracts from the Small and Medium Enterprises records,
research reports and abstracts. A comprehensive questionnaire with structured
questions was administered to the respondents sampled. The total answers of
each for each of the categories of cost of tax compliance of the respondents
were tabulated and analyzed, which formed a conclusion to this research, as
well as a recommendation for the benefit of the individuals, private companies,
and also government agencies.

Sampling Techniques
To identify the respondents of the study, the researchers made use of the
Slovins formula which is used to calculate the sample size (n) given the
population size (N) and a margin of error (e). It is a random sampling technique
formula to estimate sampling size.

where:
n = no. of samples
N = total population
e = error margin / margin of error

Using the Slovins formula, the number of the sample size is computed.
The margin of error is the amount that is allowed for in case of miscalculation
or change of circumstances. Substituting the variables with the actual numbers,

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

Molino Campus
COLLEGE OF ACCOUNTANCY
the sample size is thirty three point thirty three (33.33) which is estimated to
thirty three (33) registered SMEs.
The smallest margin of error is 1% while the largest is 10%. In this
study, the margin of error of 10% is used that made the sample size relatively
small. This is because the research locale Molino, Bacoor City, Cavite is
huge that conducting a survey to a larger sample size would not be feasible and
would be tedious enough for the conduct and completion of the study.

Statistical Treatment of Data

Raw data collection were gathered from the questionnaires given. The
answers given were tabulated and interpreted to answer the particular
statements of the problem. In this study, the researchers made use of the Likert
Scale. It is the most widely-used research method to analyze the responses in
the survey questionnaire. The scale was a 5-7-point scale which was developed
by Likert in 1932 to measure the attitude by asking respondents a series of
statements about a topic, in terms of the magnitude of the respondents
agreement with the given. The scale measures levels of agreement/disagreement
(Bowling, 1997). In this study, the answers gathered in the questionnaires
measure the level of significance of each of the factors that affect tax
compliance of the selected SMEs.
In the first part SMEs profile the researchers calculated the
percentage of each information of the SME. The second part Factors that
affect tax compliance the researchers used the Mean and Standard Deviation.

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

Molino Campus
COLLEGE OF ACCOUNTANCY
The third part significant difference of tax compliance in terms of
respondents profile the researchers used the T-test to determine if the sets of
data are significantly different from each other.

Mean and Standard Deviation:

X X

s=

Where:
S= standard deviation of a sample.

means sum of

X= each value in the data set,

X

= mean of all values in the data set,

N= number of values in the data set

When determining the overall trend of a data set or providing a rapid

snapshot of data the arithmetic mean or the average is used. However when
measuring a spread of data around the mean the statistical analysis technique
standard deviation is used. A high standard deviation signifies that the data is
spread more widely from the mean, where a low standard deviation signals that
more data align with the mean. In a portfolio of data analysis methods, the
standard deviation is useful for quickly determining dispersion of data points.

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

Molino Campus
COLLEGE OF ACCOUNTANCY
T-test Formula:
t=

Y
X
X Y
=
S D
SD/ N

Where:
X

= mean of all pretest values in the data set,

= mean of all posttest values in the data set,

S D

SD

= standard error of the difference, and

= standard deviation of the distribution of difference between the scores.

When assessing if a certain premise is actually true for your data set or

population, the statistical analysis technique hypothesis testing or t-testing

is used. The result of a hypothesis test needs to be considered statistically
significant if the results couldnt have happened by random chance.