The various advantages of computerised accounting system are:
Different types of operating systems are:
The accounting packages are classified into the following categories:
Ready-to-use accounting software is suited to organisation running small/conventional business where the frequency or volume of accounting transactions is very low.
Customised software is suited for large and medium businesses and can be linked to the other information systems. The cost of installation and maintenance is relatively high because the high cost is to be paid to the vendor for customization.
Tailored accounting software is generally tailored in large business organisations with multi users and geographically scattered locations.
The computerised accounting system has various advantages over the manual system are:
Basis |
Ready-to-use |
Tailored |
Nature of Business |
Small, conventional business |
Large, typical business |
Cost of installation and maintenance |
Low |
High |
Expected level of secrecy (software and data) |
Low |
Relatively high |
Number of users and their interface |
Limited |
Unlimited |
Adaptability |
High |
Specific |
Training requirements |
Low |
High |
Linkage to other information system |
Restricted |
Yes |
Basic requirements of a database application are given below:
Computerised accounting systems are the best form of accounting system.
It is an accounting information system that processes the financial transactions and events as per Generally Accepted Accounting Principles (GAAP) to produce reports as per user requirements.
In a computerised accounting system, the framework of storage and processing of data is called operating environment that consists of hardware as well as software in which the accounting system, works.
For example, where the number of transactions and their variety is relatively small, a personal computer with standardised software may be sufficient. However, for a large business organisation with a number of geographically scattered factories and offices, more powerful computer systems supported by sophisticated networks are required to handle the voluminous data and the complex reporting requirements.
The computerised accounting is also one of the database-oriented applications where in the transaction data is stored in well-organised database.
The user operates on such database using the required and desired interface and also takes the desired reports by suitable transformations of stored data into information.
Accounting software is an integral part of the computerised accounting system. An important factor to be considered before acquiring accounting software is the accounting expertise of people responsible in organisation for accounting work.
The need for accounting software arises in two situations:
Generic Considerations before Sourcing Accounting Software:
The accounting packages are classified into the following categories:
(a) Ready to use software: A variety of readymade softwares is available in the market. These softwares are for users at large and are not developed according to the requirements of any specific user. Most popular readymade available in the market are Tally, EX, Busy etc.
Advantages:
Limitations:
(b) Customised Software: Accounting softwares may be customised to meet the special requirement of the user. Any readymade software can be changed according to the needs and specifications of the user.
Advantages:
Limitations:
(c) Tailor-made Software: The accounting software is generally tailored in large business organisations with multi users and geographically scattered locations.
Advantages:
Limitations:
A computerised accounting system is that accounting information system that helps in processing the financial transaction and events as per the GAAP and leads to the generation of reports as per the requirements of the users.
The computerised accounting system is based on the concept of database. A computerised accounting system comprise of the following main features:
Comparison of Manual and Computerised Accounting System:
Basis |
Manual Accounting |
Computerised accounting |
Identifying financial transactions |
In this system, identification of financial transactions is done manually by applying the principles of accounting. |
In this system also identification of financial transactions is done manually by applying the principles of accounting. |
Recording |
The recording of transactions in the books of original entry and related calculations such as adding, subtraction and totaling are done manually. |
The recording of transactions i.e., storing of data in database is done manually and all other calculations are done by computers. |
Classification |
Classification i.e., posting to ledger accounts is done manually. |
The stored data are processed automatically by the software to give us ledger accounts. |
Summarising |
Summarizing i.e., balancing of ledger accounts and the preparation of trial balance is done manually. |
Transactions once recorded are stored in the database which will produce trial balance automatically. |
Adjustment entries |
The identification, recording and posting of adjustment entries is done manually. |
Identification and recording of adjustment entries is done manually and their posting etc. is done by software. |
Financial Statements |
In the manual process, preparation of trial balance is essential to produce the financial statements. |
In this, financial statements are generated from the software itself and therefore there is no need to prepare a trial balance. |
Close the Books |
Closing of books of accounts and transferring of opening balance by recording opening entries are done manually. |
Closing of books of accounts is done through the software and opening balances are stored in the database. |
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