Applications of Computers in Accounting

A computer is an electronic device, which is capable of performing a variety of operations as directed by a set of instructions. This set of instructions is called a computer programme or software. Computer components that can be physically touched such as keyboard, C.P.U, monitor, mouse, etc. are known as computer hardware. Computer software can be further divided into operating system, utility programme, application software, system software, connectivity software etc. People interacting with the computer and executing the programs or software are known as human ware. They pass on the inputs based on which the computer will carry out specified operations in accordance with a set of instructions, i.e., software. Advantages of computer system are high speed, accuracy, reliability, storage and retrieval etc. Limitations of computer system include lack of common sense, lack of own intelligence etc. Components of computer system are input, central processing unit and output.

Information technology is dedicated to provide users with the services necessary to achieve the ultimate goals. Information technology has a lot of advantages like it has made globlisation possible, a lot of new jobs are created, communication has become easy etc. Information system is an integrated set of components for collecting, storing, processing, and communicating information. Management Information system is a planned system of collecting, processing, storing and disseminating data in the form of information required to carry out the functions of management. MIS is a system or process that provides the information necessary to manage an organisation effectively. Computerised accounting system implies that various stages of accounting process – recording, classification and summarising are done with the help of computers. Computerised accounting has far superior features as compared to manual accounting in terms of speed, generation of reports etc. Accounting software is application software that records and processes accounting transactions within functional modules. Types of accounting software include readymade software, customised software and tailor made software. Accounting information system consists of people, procedure, data, technology and control. It is connected to different departments like human resources, marketing and manufacturing department. Accounting reports generated through computers include creditors report, customer report, exception report, responsibility report etc. There are different steps in designing an accounting report. Automation of accounting process implies carrying out the accounting function by means of accounting software where human intervention is minimum. There are different stages of automation process.

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