Computerised Accounting System
Computerised Accounting System refers to a system wherein the accounts of the enterprise are maintained on a computer. An accounting system has two aspects; first, it has to work under a set of well-defined accounting concepts and principles and, secondly, it has to maintain records and generate reports as defined by the user.
Application of Computers in Accounting
Accounting refers to identifying transactions and events of financial nature, record them in the books of account and produce meaningful information for the users. Thus, the foremost function of accounting is to identify transactions and events of financial nature and record them in the books of account. Accounting process means preparing vouchers for the transactions, writing them in the Journal, posting the recorded transactions in the Ledger Accounts, drawing Trial Balance and thereafter, preparing the Financial Statements, i.e., Trading Account, Profit and Loss Account and Balance Sheet.
Payroll processing means preparation of salaries and wages, accounting along with it the leave records, deduction of provident fund, ESI, etc. Leave records are part of payroll as salaries and wages are prepared taking into account the leaves taken.
Transactions are recorded using the utility or application software. Transaction recording under the computerized environment is not only accurate but is also time consuming. It is so because two time consuming processes under the manual system namely posting of entries into ledger accounts and casting (totaling and balancing) are automated by the software.
Ledger# The software is designed in such a manner that the transaction is posted to the ledger account and the ledger account is casted simultaneously with the recording of transactions.SUB-TOPIC###Trial Balance###
Posting of transactions into ledger account and also casting of ledger accounts is carried out simultaneously with the recording of transaction. It means that a trial balance can be extracted even after every transaction without any efforts.
Financial Statements, i.e., Trading, Profit and Loss Account and the Balance Sheet like extracting a trial balance can also be extracted after every transaction.
A Computerized Accounting system has many advantages, as discussed below
Large Volume of Transactions In the present day business environment, the transactions of a business are normally large in volume. The computerized accounting system can store and process such voluminous transactions with speed and accuracy.
Scalability - A computerized accounting system is scalable to handle the growing transactions.
Computerized accounting suffers from the following disadvantages
Controls - If adequate controls are not built and, where built, are not followed, it can lead to loss of data. It is important to take back - ups at regular intervals to avoid such a situation.
Data Corruption - The data can get corrupted through viruses that may come in through the internet or the use of external input devices without scanning them for viruses.
Features Computerised Accounting System
Accounting software is used to perform the function of accounting. The software functions on the concept of database. As discussed above, accounting software eliminates the process of posting a transaction into the ledger account, that is, when a transaction is entered in the computer system, the posting in the ledger account is automatic. The software is so designed that a transaction, once entered, is automatically transported to the ledger account also. Accounting Softwares can be categorized into-
- Readymade Softwares
Readymade softwares are the softwares that are developed not for any specific user but for the users in general. Since, the readymade softwares are for general user, it is not necessary that all the modules of such softwares are of use for every user.
He term 'Customised Software' means making changes in the readymade software to suit the specific requirements of the user, i.e., making it user - specific. The software available off-the-shelf is modified to suit the requirements of the user.
- Tailor - made Softwares
The term 'Tailor - made software' refers to designing and developing user specific software. These softwares, being user specific, are not available the shelf but are developed to meet the requirement of the user on the basis of discussion between the users and the developers.
Sourcing of an Accounting Software
There are many factors that are to considered before sourcing a software and they are Flexibility, Cost of Installation and Maintenance, Size of organization, Ease of Adaptation and Training Needs, Expected Level of Secrecy (Software and Data), Exporting/Importing Data Facility.