INTRODUCTION

TO
COMPUTERISED
ACCOUNTING
SYSTEM
UNIT 2
 CONTENT

• MEANING OF COMPUTERISED ACCOUNTING

• TRADITIONAL/MANUAL SYSTEM OF ACCOUNTING
• PROCESS OF COMPUTERISED ACCOUNTING
• FEATUERES OF COMPUTERISED ACCOUNTING
• DIFFERENCE BETWEEN MANUAL ACCOUNTING SYSTEM AND COMPUTERISED
ACCOUNTING
• ADVANTAGES AND DISADVANTAGES OF COMPUTERISED ACCOUNTING
• PROCESS/STEPS IN COMPUTERISED FINANCIAL ACCOUNTING
• ADVANTAGES OF THE COMPUTERISED FINANCIAL ACCOUNTING SYSTEM
• VARIOUS COMPONENTS OF A COMPUTERISED FINANCIAL ACCOUNTING SYSTEM
 MEANING OF COMPUTERISED
ACCOUNTING
• As its name suggests, "computerized accounting" is accounting done with the aid of a computer. It tends to involve dedicated accounting software and digital
spreadsheets to keep track of a business or client's financial transactions.
• 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.
• Computerized accounting systems (or software) have replaced manual-based accounting in virtually all businesses and organizations, providing accountants,
managers, employees and stakeholders access to vital accounting information at the touch of a button. Computerized accounting systems automate the accounting
process--improving efficiency and cutting down costs.
• Computerized accounting has many advantages over traditional manual accounting. Computerized accounting tends to be more accurate, is faster to use, and is less
subject to error than its manual counterpart.
 TRADITIONAL/MANUAL SYSTEM OF
ACCOUNTING

Input Processing Output

Data & instructions Manual processing Information

 PROCESS OF COMPUTERISED
ACCOUNTING

Input Processing Output

Data & instructions
-Cheques/Receipts
-Debit Notes Electronic Processing -Profit & Loss A/c
-Credit Notes Through Computers -Balance Sheet
-Invoices
 FEATUERES OF COMPUTERISED
ACCOUNTING

1. Fast, Powerful, Simple and Integrated

2. Complete Visibility Enhanced User Experience
3. Accuracy
4. Speed
5. Scalability
6. Power
7. Improved Business Performance
8. Quick Decision Making
9. Complete Reliability
 DIFFERENCE BETWEEN MANUAL ACCOUNTING SYSTEM
AND COMPUTERISED ACCOUNTING

• Recording of data
• Data entering
• Classification and processing of data
• Data Storage
• Reporting
• Accuracy
• Lesser paper work
• Codification of data
• Data sharing
• Adjusting entries
 ADVANTAGES OF
COMPUTERISED ACCOUNTING

• Codification is possible
• Easy control
• Universal application
• Easy to process huge amount of data
 DISADVANTAGES OF
COMPUTERISED ACCOUNTING

• Needs heavy investment

• Problem of security
• Loss of data
• An artificial device
• Possibility of manipulations
• Not suitable for small firms
• Requries training on part of accountants
 PROCESS/STEPS IN
COMPUTERISED FINANCIAL
ACCOUNTING
• Planning and opening of an Accounting System
• Entering of data
• Coding
• Bank reconciliation
• Posting
• Printing of trail balance
• Finalization of Accounts
 ADVANTAGES OF THE
COMPUTERISED FINANCIAL
ACCOUNTING SYSTEM
• Computerized System has a lot of memory, it can record and store the
large data in its memory, which is limited one in manual system.
• Due to Coding, it’s easy to record and process with the data in case of
computerized system.
• The system is flexible.
• The information provided by the computer system is believed to be
more accurate, reason being the chances of mistake are less in this.
 VARIOUS COMPONENTS OF A
COMPUTERISED FINANCIAL ACCOUNTING
SYSTEM

• The major components of financial accounting software are as under:

- General ledger programs
- Accounts payable program
- Accounts receivable program
- Payroll program
- Fixed assets accounting program
- Inventory accounting programmes.
 WHY ARE ACCOUNTING
SOFTWARE IMPORTANT?

• Most accountants engage in hundreds, if not thousands, of transactions every single day. Furthermore,
they would have to summarize and present these transactions with the highest level of accuracy
possible. This rigorousness of their job is because, at the end of the period, these reports would be a
major of basis of future decisions.

• Before accounting software existed, they’d have to record each one these transactions of their books
manually. Hence, not only was their job several times harder before, but the accuracies of their reports
were also highly unreliable. Thanks to accounting software, all these changed.
• Without accounting software, you will have to rely on your ledger and a calculator. While this process
is time-tested, it could take days before you can even start analyzing the data you’ve compiled. By
automating these tasks, you can accomplish more detailed reports at a fraction of the usual time.
 BENEFITS OF ACCOUNTING
SOFTWARE

• Optimized business operations: Why waste your energy on

bookkeeping when you can use it to run your business? With
accounting programs, you can work smarter, not harder. Speed up your
processing time by eliminating manual calculations from your daily to-
do list. This helps you keep your books up-to-date without cluttering up
your desk. Additionally, you can optimize your operations because you
no longer have to run numbers on different applications—you can view
everything on a single screen.
• Improved accuracy: Having an accurate record of your finances is crucial
to monitoring the progress of your business. Through the use of accounting
programs, you can simplify aspects of accounting that may be prone to
errors. Many programs can automatically make calculations as you enter
data, transfer funds, and adjust assets. It can also generate analyses while
reducing the chances of oversights, and if you want to check your record for
miscalculations, you can easily find and correct it before finalizing reports.
Some even have comment capabilities to allow you to make notes for future
reference.
• Reduced operation cost: A remarkably small number of companies outsource their
bookkeeping. This means the majority of businesses manage their finances and all
the related paperwork in-house, diminishing the time they have to work on their
actual operations. Now, cost reduction is but one of the many benefits that
outsourcing has to offer. By installing a software that suits your business, you can
save on outsourcing without compromising the creation of quality accounting
reports. As an additional perk, using cloud-based or on-premise applications can
help you save on printing and paper costs, as well as lessen your carbon footprint.
You can read more about how much does accounting software cost here.
• Secured database: Most accounting software can be password-
protected. This capability lets users protect confidential information
from being accessed by unauthorized personnel. Also, by having your
data stored in a software, you are facilitating its quick access, file
search, and retrieval, not to mention safeguarding it from natural
disasters. If your data is only accessible digitally, it is invulnerable to
calamities like earthquakes, fires, and floods.
• Automated record-keeping: An important facet of financial management,
record-keeping can be confusing and labor-intensive. To lessen the effort
you need to exert for it, various software solutions provide features that
compile the data you input in different applications. Apart from merging
them into one comprehensive operating system, it can also analyze business
practices and identify trends in your company’s money flow. After which, it
calculates your bottom line to show you where and when you are generating
more revenue, which aspects of your operations you need to invest more in
and the like.
 ACCOUNTING SOFTWARE
• To understand the purpose of accounting software in your day-to-day business operations, we must first understand its main functionalities and
the problems it can solve. it is a collection of applications designed to gather, record, summarize, and store financial data for interpretation.
Programs such as these are meant to minimize the number of effort users must exert in computing data. Moreover, they speed up the creation of
comprehensive financial reports and allow for immediate analysis of cash flows.

• Some of its key features include:

• Automatic Data Backup

• Budgeting and Forecasting

• Check Printing

• Comment Capabilities

• Cost Predictions

• Customizable Reports

• External Application Integration

• Fund Accounting

• Inventory Management

• Password Protection

• Payroll Management
 EXAMPLES OF ACCOUNTING
SOFTWARE

• Xero
• Freshbooks
• NetSuite ERP
• QuickBooks Online
• Invoiced
• Zoho Books
• Xero is accounting software designed to help small businesses,
accountants, and bookkeepers simplify everyday business tasks. With
over 2 million users globally, Xero includes enterprise-grade modern
features such as bill payment, bank integration, payroll, expense
management, and invoicing. It can be your all-in-one accounting
platform to process payments, complete tax computations/tax returns,
and automate accounting processes to streamline your operations.
• FreshBooks is a popular accounting and financial software that is
perfect for small and medium-sized businesses. It is a flexible solution
that makes complex financial processes simple and efficient. The
platform’s robust features allow you to focus on growing your
businesses instead of wasting time on repetitive accounting processes
• NetSuite ERP is a cloud-based ERP platform that comes with a fully-
featured financial application that suits medium-sized and large
enterprises. It includes accounts receivables and payables, fixed assets
management, general ledger, and tax management. NetSuite ERP is a
full-scale platform that includes other functionalities such as inventory
management, order management, revenue management, fixed assets,
and more.
• QuickBooks Online is a cost-effective solution designed for small
businesses. This cloud-based application provides all essential
accounting tools in a single platform to help small and growing
businesses, firms, and freelancers simplify their accounting and finance
management processes.
• Invoiced is a cloud-based accounts receivable automation solution that
helps businesses accelerate billing, automate collection and streamline
payments. The software puts the power of four interconnected modules
in one — Invoice-to-Cash, Payment Plans, Subscription Billing, and
Customer Portal. The result is a seamless accounting workflow that
speeds up your processes and maximizes productivity.
• ZOHO is a part of the popular Zoho family of business solutions. The
accounting software is suitable for small business with its smart and
innovative solutions. It is easy to remain on top of your cash flow with
its intuitive interface and controls. You can quickly make data-driven
decisions in real-time with its powerful reports and analytics.