NCERT Solutions Class 11 Accountancy Chapter 13

NCERT Solutions for Class 11 Accountancy Chapter 13 Computerised Accounting System

NCERT Solutions for Class 11 Accountancy Chapter 13 can help students save a lot of time when solving the NCERT textbook Chapter 13 questions. The solutions are prepared by subject matter experts who have ensured that answers are written in simple language, are highly accurate, and are easy to comprehend.

Class 11 Accountancy NCERT Solutions Chapter 13 Computerised Accounting System

Access NCERT Solutions for Class 11 Accountancy Chapter 13 – Computerised Accounting System

What do we mean by a Computerised Accounting System?

As the name suggests, a  computerised Accounting System is an accounting system that uses computers to record transactions, store data, create financial systems, and provide useful insights into a company’s financials.

Given the present state of digitisation, computerised accounting is accurate, dependable and efficient in producing timely papers, including the most up-to-date information. It is easily accessible to the target audience and provides real-time convenience because of its user-friendly interface. Computerised Accounting Systems are well-defined programs used to create revenue and expense accounts and may be accessed via the internet from anywhere.

Advantages of Computerised Accounting System

Following are the major advantages of Computerised Accounting Systems:

  • Error Margin Reduction:

The Computerised Accounting System has helped reduce error margins in a very effective and efficient way as technology has grown increasingly interwoven into our daily lives. It has also simplified the process of finding and correcting errors.

  • Speed:

Computerised systems have increased the pace with which financial tasks are completed. Collaboration and portability are the two factors to be considered. Computerised systems, files, and information may now be accessed from any location and device. Employees will be able to communicate and complete tasks more quickly and effectively.

Basic Requirements for Every Computerised Accounting System

Following are the basic requirements for every Computerised Accounting System:

Back-End Database: It is a data storage system which provides necessary data to the user based on their request Complete data is not visible to the user.

Front-End Database: A connection between the user and the back-end database depending on interactions with the user’s dialogue or options.

Providing Accountancy Class 11 Chapter 13 Solutions

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Extramarks’ subject experts and professionals provide the most straightforward and most reliable Class 11 Accountancy Chapter 13 NCERT Solutions. A single problem can be solved in different ways. Extramarks also provides solved past years’ question papers to the students with detailed answers. 

Solved Example

  • What do you understand about a ledger?

Ans: A ledger is a type of book. All the credits and debits in the connected account are detailed in the book. It aids in calculating the total outcome of the transactions. It also aids in the creation of a list of accounts and the analysis of the company’s existing status. It aids in diagnosing a company’s liabilities and assets to establish a proper balance and formulate strategies.

Fun Fact

In the first prototype of a user-operable machine, thirteen wheels were used to enter numerical values. The prototype was developed by Leonardo Da Vinci. Both Luca Pacioli and Leornado Da Vinci published a book named ‘Summa de arithmetica, geometria, proportioni et proportionalita’, which focused on the aspect of bookkeeping. The book was published in 1494.

Q.1 State the four basic requirements of a database application.

Ans.

Basic requirements of a database application are given below:

  • Front-end interface: It is the link between the user and the database oriented software, through which the user communicates to the back-end database.
  • Back-end Database: It stores data which can be retrieved by the user only to the extent he is authorised to access.
  • Data Processing: It is the process of transforming the data into information useful for taking decisions.
  • Reporting System: It is the system which helps in composing all the information in some integrated form known as a report.

Q.2 Name the various categories of accounting package.

Ans.

The accounting packages are classified into the following categories:

  • Ready to use
  • Customised
  • Tailored

Q.3 Give examples of two types of operating systems.

Ans.

Different types of operating systems are:

  • Batch processing operating system: Batch processing applies to large and voluminous data that is accumulated offline from various units: branches or departments. The entire accumulated data is processed in one shot to generate the desired reports according to decision requirement.
  • Real time processing operating system: It provides online outcomes in the form of information and reports without time tag between the transaction and its processing.

Q.4 List the various advantages of computerised accounting systems.

Ans.

The various advantages of computerised accounting system are:

  • Speed
  • Reliability
  • Scalability
  • Efficiency
  • MIS Reports
  • Storage and Retrieval
  • Automated document production
  • Accuracy
  • Up-to-date
  • Legibility
  • Quality Report
  • Real time user interface
  • Motivation and Employees interest

Q.5 Give two examples each of the organisation where ‘ready-to-use’, ‘customised’, and ‘tailored’ accounting packages respectively suitable to perform the accounting activity.

Ans.

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.

Q.6 Distinguish between a ‘ready-to-use’ and ‘tailored’ accounting software.

Ans.

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

Q.7 Define a computerised accounting system. Distinguish between a manual and computerised accounting system.

Ans.

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:

  • It facilitates on-line input and storage of accounting data.
  • It generates a print-out of purchase and sales invoices.
  • It facilitates a system of codification of accounts and transactions.
  • It generates different reports quickly.

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.

Q.8 Discuss the advantages of computerised accounting system over the manual accounting system.

Ans.

The computerised accounting system has various advantages over the manual system are:

  • High Speed: The accounting speed of a computer is much faster than that of a human being.
  • High Reliability: The extent of reliability of the information generated by a computer is immense.
  • Accuracy: The possibility of error is eliminated in a computerised accounting system because the primary accounting data is entered once for all the subsequent usage and processes in preparing the accounting reports.
  • Updation of Information: All the related records in a computer get automatically updated once any information is punched in.
  • Efficiency: The computer based accounting systems ensure better and efficient use of resources and time.
  • Legibility: The data displayed on a computer screen is clear and legible thus avoiding errors caused by untidy writing in a manual accounting system.
  • Lower Cost: The cost of maintaining accounts under the computerised system is much lower as compared to the manual system.
  • Timely Reporting: The computerised accounting system facilitates the generation of the Management Information System reports at a very high speed which enables the management to take quick decisions.
  • Flexible Reporting: In this, the data can be processed further to obtain the desired report.
  • Storage and Retrieval: The computerised accounting system allows the users to store data in a manner that does not require a large amount of physical space. The accounting data is stored in hard-disks, CD-ROMs, Floppies that occupy a fraction of physical space compared to books of accounts in the form of ledger, journal and other accounting registers.
  • Security of Data: Under computerised accounting, the accounting data is safer in comparison to manual system. Under computerised system secrecy of data can be maintained by using a password which means only authorised person will have access to data.
  • Queries: In computerised system, replies to various queries can be obtained very quickly.
  • Motivation and employees interest: The computer system requires a specialised training of staff, which makes them feel more valued. This motivates them to develop interest in the job.
  • Quality Reports: The inbuilt checks and untouchable features of data handling facilitate hygienic and true accounting reports that are highly objective and can be relied upon.

Q.9 Describe the various types of accounting software along with their advantages and limitations.

Ans.

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:

  • These softwares are developed by a group of highly experienced group of professionals.
  • Since these softwares are used by a large number of users, accounting personnel well versed with these softwares are easily available.
  • They are easy to learn and their training is sometimes offered free by the vendor.
  • Better after sales maintenance service.
  • Available off-the-shelf, time required in developing a tailor made software is saved.
  • The cost of installation is low.

Limitations:

  • These softwares use LaserJet printers which are costly than the use of Dot matrix printers.
  • The level of secrecy in these softwares is very low thus the softwares highly prone to frauds.
  • These softwares offer very little scope of linking to other information system.

(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:

  • These softwares are designed to suit the specific requirements of the user. Hence, they are used by a large number of large and medium size business enterprises.
  • Level of secrecy for the data is higher.
  • Linkage to other information system is available on the basis of need of the enterprise.

Limitations:

  • Cost of installation and maintenance is higher in comparison to ready to use software.
  • Training requirement for using these packages is higher in comparison to ready to use software.

(c) Tailor-made Software: The accounting software is generally tailored in large business organisations with multi users and geographically scattered locations.

Advantages:

  • It, being developed according to the specifications of the users, takes care of the specific needs of the enterprise.
  • The level of secrecy of data and authenticity checks are robust in such softwares.
  • They can be effectively linked to some other information systems.

Limitations:

  • If the accounts are grouped in an incorrect manner, the results will be misleading.
  • The cost of development and maintenance is much higher.
  • It is difficult to learn and require specialised training.
  • Training costs are very high.

Q.10 ‘Accounting software is an integral part of the computerised accounting system’. Explain briefly list the generic considerations before sourcing accounting software.

Ans.

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:

  • When the computerised accounting system is implemented to replace the manual system or
  • When the current computerised system needs to be replaced with a new one in view of changing needs.

Generic Considerations before Sourcing Accounting Software:

  • Flexibility: The software should b easily upgradable and must have the feature of easy modifications. It should offer some flexibility between the users of the software, the switch over between the accountants (users), operating systems and the hardware.
  • The cost of installation and maintenance: A simple cost benefit analysis is done before installing any software. The cost of its acquisition, installation and maintenance are the factors of deep consideration before sourcing any software.
  • Size of the organisation: The size of the organisation and the volume of its accounting transactions determine the requirements of the type of accounting software.
  • Ease of Adaptation and Training needs: The accounting software should be easily understandable and adaptable. It must not require extensive training.
  • Utilities/MIS Reports: The MIS reports and the degree to which they are used in the organisation also determine the acquisition of software to a lot of extent.
  • Expected Level of secrecy: The level of secrecy should be high. It should be impossible for any unauthorized user to access the data.
  • Exporting/Importing Data Facility: The transfer of database to other systems or software is sometimes expected from the accounting software. The software should allow the hygienic, untouched data transfer.
  • Vendors Reputation and Capability: This depends upon how long has been the vendor is in business of software development, whether there are other users of the software and extent of the availability of support mechanisms outside the premises of the vendor.

Q.11 ‘Computerised Accounting System are best form of accounting system’. Do you agree? Comment.

Ans.

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.

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FAQs (Frequently Asked Questions)

Accounting has progressed on a variety of levels. With the use of information technology in accounting, more doors are opening, and this trend will continue. The rapid growth of the IT industry and its impact on the auditing and accounting professions and the introduction of big data have prompted regulatory organisations to explore modifying or issuing new accounting standards.

Students in Class 11 Accountancy can use NCERT Solutions for Class 11 Accountancy Chapter 13 while solving NCERT textbook questions. They will get accurate answers to the questions, and also learn the right pattern to answer a question. This will help students score high marks in exams.