Introduction:

In modern age, computer is becoming inseparable automation instrument for business as well as
individual. Nowadays knowledge and operation of computer are considered as an essential thing.
If a person does not know the use of computer, its usefulness is questionable. Today most of the
entities – including small traders – prepare their accounts using computers. Because of
computers, business entities can store, use and analyze the raw data as and when required. In
modern days, it is difficult to find out a field in which computer is not used, which shows its
importance.

Applications of computers for accounting has grown phenomenally, when accounts are
maintained using computers raw data based on vouchers and other documents are entered into
computer. Computer process such raw data. This process includes recording, storing, analyzing
and retrieving information. Computers can store information, analyze them and such information
can be retrieved when required. However, they respond according to set of instructions given to
it and such instructions are known as Programme or Software. Based on such software only,
computer processes raw data and generates meaningful information or reports as and when
required.

Computerized accounting system are connected through computer, network server or remote
accessed device with internet. Every company or firm prepares their reports as per Generally
Accepted Accounting Principles (GAPP).

Question no. 1-Features of Computerized Accounting System-

(1) Integrated date & Information:

Computerized Accounting System is developed and designed for all business activities like
purchase, sales, finance, inventory, payroll and manufacturing which is user friendly, automated
and integrated for such process. Due to computerized accounting system, businessman keep their
accounting records accurate, up-to-date and get information within no time. When Computerized
Accounting is mixed with Management Information System (MIS) with multi-lingual and Data
organization capabilities to support the company then all the business operations will be easy and
cost effective.

(2) Accuracy and Speed:

As per the need of business, Computerized Accounting has various templates and software due
to which fast and accurate data entry and transactions operations are possible which generates
various information and reports quickly and automatically.

(3) Quick Decision Making:

Based on information and reports generated by Computerized Accounting System, the company
or firm can plan its activities, can take quick decision and can access complete and critical
information of the company.
(4) Modern and Integrated:

Computerized Accounting System perform functions at much higher speed than the speed of
human beings which saves time and other resources. If accounts are prepared with the help of
computer. Trial balance and Final accounts can be derived at any point of time within fraction of
seconds.

(5) Immediate Availability of Books of Accounts:

Due to Computerized Accounting System, books and registers tike Cash book, Purchase register,
Sales register, Bank book, Account of Receivables and Payables are readily available at any
point of time.

(6) Security:

By keeping security control at various stage, data and information in Computerized

Accounting System can be kept confidential and more secured. This kind of the security is not
possible in the traditional accounting system.

(7) Transparency:

For the business, greater transparency is possible in the day to day business operations due to
Computerized Accounting System.

(8) Grouping of Accounts:

In the Computerized Accounting System grouping of Accounts is easily possible. As per the
business requirements, groups like Assets, Liabilities, Income, Expenditure, etc. and their
subgroups can be derived as per convenience of user.

Question no. 2. Importance of Computerized Accounting System-

Following are the points of importance of Computerized Accounting System for the various
types of business organizations, firms, companies, etc.

 Automation: Compared to manual accounting calculations, all the calculations are

automatically
done by the accounting software with minimum time and without mistakes.
 Multi-user Facilities: Computerized Accounting System with multi-user facility enables
business houses to access accounting information online or offline, inside or outside the
office simultaneously.
 Accuracy: Computers performs functions with high degree of accuracy. If hardware,
software and ^
human ware are proper, the Computerized Accounting System can assure of accurate
outcome.
  Speed: Computerized Accounting software perform functions at much higher speed than
the speed of human beings. If accounts are prepared with the help of computer, final
accounts can be prepared in much lesser time and as per user requirements.
 Reduction in cost: Reduction in cost due to Computerized Accounting System is
possible as less persons in less time can complete the work with more speed and more
accuracy.
 Systematic and up-to-date records: Computerized Accounting System ensures
systematic and up-to-date financial records of the business organization.
 Huge Storage Capacity: Manual accounting requires separate books and registers to be
maintained
every year while in Computerized Accounting System records of many years can be
stored in system / computer.
 Compact: The voluminous financial information can be stored in a compact way by the
means of hard disk or external storage device which requires very little Space.
 Transferability / Sharing Information: Business organization can share the financial
information to interested parties through pen drive or through internet.

Question no. 3 Components of Computerized Accounting System-

(a) Hardware: Hardware comprises of electronic equipment that includes computers, hard disks,
monitors, printers and the network that connects with them. Most modern accounting system
require a network, the system of electronic linkages which allows many computers to the main
computer or server which stores the program and data, with right communication of hardware
and software, one can perform all the work on site.

(b) Software: Software is a set of instructions and programme that can direct and perform
desired task as required by users. Accounting software accepts, edits and stores transactions and
data and generates reports as per the requirement.

(c) Personnel: Personnel / Human ware is the people who dealt with computer and software and
play an important role in effective implementation of Computerized Accounting System.

Management of a Computerized Accounting System requires careful planning of data and access
to the data. Security is sought by setting passwords, codes, etc. at different stage which gives
them more safety of data.

Question no. 4 Comparison between Manual Accounting Process and Computerized

Accounting Process.

Basis of Difference Manual Accounting Computerized Accounting

(1) Meaning Manual accounting is the Computer accounting is the
system in which each system in which transactions
business transactions are are recorded by using
recorded in books of accounts computers and accounting
like journal and ledger. software for digital record.
(2) Calculation and total In this system, all calculations In this system, all calculations
are done manually. are done by computer system.

Here, balance of each Here, balance of each

accounts are to be found out accounts are calculated /
by making total of debit and found automatically.
credit side

(3) Ledger Accounts From the journal, recorded Here, once a voucher is
transactions have to be posted entered, it will automatically
in different ledger accounts posted in the different ledger
manually, so chances of accounts without any
mistake is always there. mistake.
(4) Trial Balance After posting, trial balance is Trial balance is automatically
to be prepared by taking prepared using accounting
balance of each ledger software.
accounts.
(5) Record of Adjustment Adjustment journal entries Adjustment entries are to be
Entries and its posting in the ledger passed in the system, and
accounts will be done posting in the ledger accounts
manually one by one. will be done automatically.
(6) Financial Statements Financial Statements are With the help of accounting
prepared manually by software, such financial
transferring trial balance statements are automatically
figures carefully. prepared after recording
adjustment entries.
(7) Closing the books After close of every year; in There is no need for
the beginning of year, recording opening balances as
opening balances are required the balances are automatically
to be carried forward in new carried forward to next year.
books of accounts.