Computerized Accounting Information System

Computerized accounting is a beneficial use of current technological advances. Not only has it revolutionized the traditional paper methods of accounting, but it has also created new types of accounting applications for business. Companies now create entire accounting information systems that integrate all business operations, including external suppliers and vendors in the value chain.

Scope of computerized accounting

Enterprise Systems Enterprise resource systems are a relatively new type of computer management system that includes several functions of traditional accounting software. An enterprise resource system has every major business operation linked into one software system that accountants can use to retrieve pertinent financial information and input into the accounting module. This type of management software is used in large organizations to increase the speed and availability of financial information. Value Chain Computerized value chains allow the traditional enterprise resource system to import and export certain types of financial information to outside suppliers and vendors. Value chains are extensively used in manufacturing operations to plan for materials purchase and finished goods transport to wholesalers and retailers. Computerized accounting software will transmit order information and purchase orders to suppliers for production materials as orders come into the system from wholesalers and retailers. This shortens the lead time between production and sales, increasing the company's profitability. Web-Based With all the information being transmitted through the enterprise resource system and external suppliers and vendors, many computerized accounting programs are Internet-based. This allows companies to use pre-existing fiber-optic communication lines for accessing accounting software information. Internet-based programs also allow companies to use instant-messaging and email communication methods to transmit purchasing information. Additionally, companies are now using online money transfers to pay for goods, cutting down on payment processing delays. Networking Another important feature of computerized accounting is the ability to have several accountants access the system internally to review and process the financial information. Companies usually set up an intranet, which allows users to access information on their personal computer through a server-based system. These intranets, called local-area networks, are extremely reliable and cost-efficient for companies to install. They improve employee productivity, communication and financial integrity through the various safety controls employed by company management. Functionality

The most important part of a computerized accounting system is the improved functionality it provides to internal accountants. Most accounting software can have financial information imported from external enterprise resource or value chain systems, allowing accountant to simply review and correct and problems. These programs also have internal calculation checks that look for value errors, printing an exception report for accountants to review these problems. Financial information can also be exported into financial statements for final review by accounting management.

Advantages of Using Computerized Accounting

Companies often use a computerized accounting system to process and maintain accounting transactions and records. The system absorbs and stores this data by using modules such as accounts payables, accounts receivables, trial balance and payroll. A computerized accounting system is either specifically designed for a certain company or it is purchased from a thirdparty (e.g. Timberline or MAS 200). A computerized accounting system is a valuable tool for many companies. Speed The system processes data rapidly. Once the information is keyed into the related module such as payroll or accounts payable, the system processes and stores it instantly. Automatic Generation The majority of computerized accounting systems have features such as order-entry and generation of associated invoices. The employer can create accounts for their clients, storing their names, addresses, orders and invoices for as long as necessary. A computerized system also allows the employer to make and print account statements. Further, many accounting systems have a payroll feature, which enables complete payroll processing, including the generation and printing of checks and reports. Timeliness The employer is able to print and reprint customer orders, invoices, and all other accounting transactions as required. He can also easily find employees' payroll data such as current address and pay amount without having to search through filing cabinets to locate personnel files. Eradicates Manual Processing A computerized accounting system eliminates manual processing. The latter involves processing and recording the company's incomes, expenses, profits, losses, and reconciliation by hand, creating much room for error. Payroll transactions and the business' tax transactions are also recorded manually. With a computerized accounting system, the employer has a smoother record-keeping and balancing process.

Staff Motivation

A computerized accounting system often requires the staff to undergo training to learn new skills, making them feel motivated. Further, the employer can outsource training to a representative from the software company, creating less pressure on staff members to administer the training themselves. Simplifies Audits If the federal or state government decides to audit the company, a computerized accounting system simplifies the process. Normally, before the audit takes place, the auditor notifies the employer by mail about the specific documents required for the audit. Depending on the nature of the audit, documents may include tax statements, payroll registers and chart of accounts. A computerized accounting system can store many years of information. If the audit requires it, the employer can access information dating from many years back. If, during the audit, the auditor spontaneously requests an accounting document, the employer can quickly retrieve it from the system instead of rummaging through storage boxes to locate hard copies. Reduces Embezzlement A computerized accounting software makes it difficult for employees to steal money from the company. For example, if a payroll employee tries to pay herself more than the allowed amount, her theft will most likely be discovered because the accounting system stores all saved transactions.

Manual vs Computerized System

Manual accounting requires that all journal entries, invoices and other financial documents be created by hand. Computerized accounting allows users to input information into accounting software programs. Speed Computerized accounting produces information much faster than manual accounting. Accounting software packages, such as QuickBooks and Peachtree, come with built-in databases that allow users to input data. Accuracy Manual accounting systems are prone to mathematical errors and misplaced numbers. With a computerized accounting system, your company data is automatically calculated based on numbers you input. Financial Statements In a manual accounting system, you have to prepare your company's income statement, balance sheet and statement of owner's equity by hand. Information from your journal entries helps formulate your company's financial statements. Computerized accounting systems allow financial statements to be created from information stored in the database.

Cost The cost of computerized accounting systems can range from hundreds to thousands of dollars for large businesses. A computerized accounting system may save on man hours used for creating financial statements and other reports. For this reason, many small and mid-sized businesses use computerized accounting software. Reports Reports are created in a timely manner when using a computerized accounting system. Reports generated from computerized accounting software allow managers to run the company in a more efficient manner. Creating reports in a manual accounting system may lead to more staff frustration and result in having to work with outdated information.

Importance of Computerized Accounting

Computerized accounting systems are important to businesses in various ways. The use of computers is time-saving for businesses and all financial information for the business is wellorganized. Time Savings Using a computerized accounting system saves companies time and money. The use of a computer makes inputting accounting information simple. Transactions are entered into the system and the system posts transactions accordingly. Organization A computerized accounting system helps businesses stay organized. When information is entered into the system, it makes finding the information easy. Employees can look up any financial information whenever it is needed. Storage Storing information is vital to a business. After information is entered into the system, the information is stored indefinitely. Companies perform backups on the system regularly to avoid losing any information. Distribution Computerized accounting systems allow companies to distribute financial information easily. Financial statements are printed directly from the system and are distributed internally and externally to those needing the information.

Value Chain Analysis. The concept of value chain have been described and introduced by the famous personality Michael porter in the year 1985 where he talks about certain terms: 1.Inbound logistics 2. Operations 3. Outbound logistics 4. Marketing & sales 5. Service These above activities are supported by these manpower and sources: 1. Firm infrastructure 2. Human resource management 3. Technology development 4. Procurement The primary activities that offers a customer with the cost of the activities and with the profit margin from that activities which are described below: Inbound logistics: It involves with the relationship between the supplier and the firm which has the activities of supplies of raw materials, the receiving, delivering and storing as well keeping the raw materials safe. The distribution to manufacturing of these raw materials is also concerned. Involvement of computerized system in this kind of activity which are for the distribution and such storing of supplies for manufacturing helps the company to provide accurate amount of supplies for delivery that tends to communicate by means of computer system that provides speed on such activity. The system of computer or what we called a certain database has been developed to perform this certain task on performing this kind of activity. As compared to manual, the flow of stored supplies for manufacturing is complicated because the monitoring by means of manual is complicatedly done through counting by the assigned personnel but by means of computerized system the flow is definite because there are accounts and specific flows for accurate and quick processes is developed by just one click on the mouse the verified task is being done easily. Operations: In this type of activity, the process and the steps of transformation of goods and services means to transform inputs into outputs that is product and services. Involvement of computerized system is in this kind of activity helps the company to operate efficiently and

effectively by means of developing commands on machines by a specific server to manipulate specific jobs at a right time of allocated task to be done. In robotics, there are databases to be conducted in order to manipulate a certain machine to perform its task, by means of this the job is accurate and quickly done as compared to manual system. In manual, there are assigned many employees that perform task but in this king of system of application of database which machines are being commanded by a specified server only a skilled personnel is doing this king of activity, and by means of this the company can minimize its expenses in terms of salaries and wages but more investing in technological affairs. Outbound logistics: It includes most of the activities from collection to distribution. First it requires the activity of collection, then it needs to store the warehouse and the final stage is to distribute those products. Involvement of computerized system in this kind of activity is important because since this activity involves the monitoring of finished products it is important to developed computerized system to manipulate inspection, regulation of flow of product to the warehouse, and testing of the product to ensure the satisfaction of customers. The system to be developed is complicated but it ensures the safety of products while the products is the warehouse that are waiting for delivery. In terms of inspection, the terms of computerized system is to secure the products on certain events like a theft, but in accurate inspectioning manual is to be done. CCTVs must be installed in warehouses these are controls of company to minimize loss but in order it to be done the CCTVs must be connected in a server in a security department for them to utilize and to monitor the products easily. Marketing and sales: These includes the needs and requirements of the customer, the identification of the customer needs and demand so they can generate sales. These activities included to inform the buyer about the products or services to make them aware of the product or services. They create the customer needs and facilitate them for the purchase of that product. Involvement of a computerized system in this kind of activity is important because it engages for the enhancement of sales by means of marketing its products or advertising it in the public for them to know for this kind of product. The development of website for the company is one tool of utilizing and advertising its products through internet. Through this, the customer can surf the web anytime and anywhere they want to and also the company must developed a system for the customer for their suggestions and comments on the products of the company they lend in order to enhance and to attain such feedbacks, by means of this there is a customer-company relationship that enables it to develop such products that a customer wants. Service: It is the next step after the purchase and it is given to the customer after giving them the delivery of the product. This is basically to solve the queries and problems of the customer which requires giving them to the customer after their purchase and they should not feel bad about your product or brand or your company so the service is needed when there is selling and the selling is incomplete without services. Through the use of a computerized system, the company can develop a web for customers to post complain on their certain products they want to provide for assistance, inspection or even fix by the personnel assigned by the

company. In order to have accurate assistance the web must contain forums for the customers can provide its feedbacks about the products online, it is like the usual manner of customer assistance what the difference is that it is online. It is useful especially to those companies that extends it operations worldwide because even if it is far the company can provide its assistance for a certain customer that has a complain in its product it purchased. The secondary activities which includes: Infrastructure: it consists of various department and function in the company like accounting, financing, planning, public affairs, quality management, general management, public affairs, government relations and many more. It serves the companys needs and controls the system culture of the company and also the structure of an organization. It helps in the various parts and the departments of the company. There must be developed a computerized system in order for them to communicate. Like for example, problems on the production department, the supervisor must have a direct contact on the management so that the management can plan for the future events that are certain to happen and also for them to lessen the risk in case there are negative events that are probable to happen. Human resource management: It is the main part of the organization because it helps in recruiting, hiring, controlling the costs of the company, it decides about the training and development part in the company to their employees and also helps in deciding the compensation of the employees. A good management always tries to enhance the skills of its employees by the help of co-ordination, proper training, developing their ideas and thoughts and managing them well. They reward him at the time of better performance with high awards, certificates, recognition like bonus, incentives, extra pay, and promotion as per performance. When an HR always appreciates the good work and provides the reward and recognition which motivate the employees and also speak about the respect of others. It always believes in motivating its people because the environment becomes energetic and people feel refresh in work and the culture also become well. Application of computerized system for this kind of activity helps the management to monitor the performance of the of its employees by applying it to the database a specific account for each of the employees for their daily records in their involvement in the operations of the company. Setting an incentive for the most performing employee is one of the motivating factors for them to perform efficiently but the problem is who among them deserve for this incentive? In order to solve this problem, the computerized system serves as the basis for which it provides the details that a company wants to an employee to be given a reward for its excellent performance. And also other example is, the company must have a direct contact on the web if there is training for the employees to help them to perform on its daily tasks. Through this, the key personnels are being sustained and not only this, but they are being enhanced on a specific job that needs to be done in terms of their expertise on a certain job, and also through this the company can minimize employee turnovers that engages for a company to spent an amount specified.

Technology development: it is related with the software and the hardware requirements in the company. The advancement of technological innovations and the knowledge of the new technology and development which creates support and adds value to the organization for the achievement of the organizations goals. The innovation of new technologies, the advancement of new inventories and machines helps the organization to achieve their goals and profits. Application of computerized system helps the company to get informations on the web for an in demand and for the most suitable and better capital investments for a better performance of the company. Through this, the company is communicating to other companies on what are the economic, and less expensive methods of generating profits for a company to increase its wealth by means of this activity. Procurement: The materials which are purchased for the companys inputs such as equipments, materials, resources for the firm or an organization. The margin and the profit of the organization is depends on the usefulness of these activities effectively so that the customer feel that they are able to pay the cost for the product in the value chain. The value chain is very much useful in defining the core competence of the firm and the competitive advantage as well. Cost advantage is defined by understanding the cost activities properly in the value chain. It determines the economies of scale; learnings from the organization, the right use of resources and the maximum utilization of resources as well the capacity, the timings, the market timings, the rules and regulations, policies of the firm, the cost of differentiation, the geographic location, the factors such as taxes, union activity etc. Value chain increases the uniqueness and also the differentiation of the product. The business functions such as research and marketing, design of the product and services, production, manufacturing, sales & marketing, distribution, customer service and many more which helps in the value chain function.