Mrs. Meenakshi

PGT Commerce

JNV Mungeshpur Delhi - 39

OBJECT OF STUDY

• To study about computerized accounting.
• To study about manual vs computerized accounting.

INTRODUCTION

• A computerized accounting system is a software program that is stored on a company's computer, network server, or remotely accessed via the Internet and it can be a great benefit for a business. It can help streamline accounting steps and help minimize errors.

OBJECTIVE OF COMPUTERIZED ACCOUNTING

• Labor Saving:

Labor saving is the main aim of introduction of computers in accounting. It refers to annual savings in labor cost or increase in the volume of work handled by the existing staff.

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• Time Saving:

Savings in time is another object of computerization. Computers should be used whenever it is important to save time. It is important that jobs should be completed in a specified time such as the preparation of pay rolls and statement of accounts. Time so saved by using computers may be used for other jobs.

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• Minimization of Frauds:

Computer is mainly installed to minimize the chances of frauds committed by the employees, especially in maintaining the books of accounts and handling cash.

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• Effect on Personnel:

Computer relieves the manual drudgery, reduces the hardness of work and fatigue, and to that extent improves the morale of the employees.

• Accuracy:

Accuracy in accounting statements and books of accounts is the most important in business. This can be done without any errors or mistakes with the help of computers. It also helps to locate the errors and frauds very easily.

ROLE OF COMPUTERIZED ACCOUNTING

• The manual system of recording accounting transactions requires maintaining books of accounts such as journal, cash book, special purpose books, and ledger and so on. From these books summary of transactions and financial statements are prepared manually.
• The advanced technology involves various machines, which can perform different accounting functions, for example a billing machine. This machine is capable of computing discount, adding net total and posting the requisite data to the relevant accounts.

FEATURES OF A COMPUTERISED ACCOUNTING PROGRAM

• Inputting invoices, credit notes, receipts and payments

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• By entering one transaction all of the double entry is completed for you. (Because a computerised accounting system is fully integrated)

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• There may be a separate payroll program

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• Generating Management reports

COMPUTERIZED ACCOUNTING

Advantages

SYSTEM

Dis-advantages

• All banking activities are done by using computer system
• Transaction can be done anywhere and anytime
• It takes shorten time for any banking process

• Cost of computerized system is very high
• High cost for maintenance
• The system can be infected

by viruses

• Member of workers have to be reduce as they are no longer needed

MANUAL ACCOUNTING vs COMPUTERIZED

ACCOUNTING

• Manual accounting is the system in which we keep physical register of journal and ledger for keeping the records of each transaction.
• In manual accounting, all calculation of adding and subtracting are done manually.

• In this system of accounting, we use computer and different accounting software for digital record of each transaction.
• In computerized accounting, our duty is to record the transactions manually in the database. All the calculations are done by computer system.

• In manual accounting, we check the journal and then we transfer figures to related accounts' debit or credit side through manual posting.

o Both adjustment journal entries and its posting in the ledger accounts will be done manually one by one.

• We have to make the financial statements manually by careful transferring trial balance's figures in income statement and balance sheet.

• Computerized accounting system will automatically process the system and will make all the accounts ledgers because we have pass the voucher entries under its respected ledger account.

o Only adjustment entries will pass in the computerized accounting system, posting in the ledger accounts will be done automatically.

• We need not prepare financial statement manually, financial statements will become automatically.

Developments of computer accounting

Specialized Software

• In the most general terms, CAATs can refer to any computer program utilized to improve the audit process.(Computer Assisted Auditing Techniques)

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• Generally, however, it is used to refer to any data extraction and analysis software.

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• This would include programs such as spreadsheets (e.g. Excel), databases (e.g. Access), statistical analysis (e.g. SAS), business intelligence

(e.g. Crystal Reports and Business Objects), etc.

CONCLUSIONS

• you would have realized that although computerized accounting systems are labour
• -saving, it is not without disadvantages. An accountant is not made redundant with the introduction of computerized accounting but his job scope is redefined such that he is able to add value to the managing of the organization concerned.