<![CDATA[Purpose - This study examined whether digital accounting capability was associated with the sustainability of micro, small, and medium-sized enterprises (MSMEs), and whether financial reporting quality and financial literacy served as a mediator and moderator, respectively. Methodology: An explanatory cross-sectional survey of 258 MSME managers in the Special Region of Yogyakarta and Central Java, Indonesia, was analyzed using structural equation modeling with LISREL. Six hypotheses covered direct, indirect, and interaction pathways. Results: Digital accounting capability was not significantly associated with financial reporting quality or MSME sustainability. Financial reporting quality was positively associated with sustainability (coefficient = 1.45; t = 9.57). Its indirect pathway from digital accounting capability was not significant (coefficient = −0.05; t = −1.31). Financial literacy did not significantly moderate the digital accounting capability–reporting quality relationship (coefficient = 0.01; t = 1.94), but the financial reporting quality × financial literacy interaction was significant and negative (coefficient = −0.02; t = −3.84). Contribution: The results distinguish digital accounting capability from the quality of accounting information and show that financial literacy did not uniformly strengthen the tested relationships. The cross-sectional estimates support associations, not causal claims.]]>
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