COMPUTERIZED

ACCOUNTING SYSTEM
Prepared By Miss. Akshada Zurale (Assistant Professor)
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
• Labour Saving: Labour saving is the main aim of
introduction of computers in accounting.
• It refers to annual savings in labour cost or increase in the
volume of work handled by the existing staff.
• 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.
• 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.
• Effect on Personnel: Computer relieves the manual
work, reduces the hardness of work and tiredness, 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
• By entering one transaction all of the double entry is
completed for you. (Because a computerised accounting
system is fully integrated)
• There may be a separate payroll program
• Generating Management reports
COMPUTERIZED ACCOUNTING SYSTEM
Advantages Dis-advantages

All banking activities are done Cost of computerized system is

by using computer system very high

Transaction can be done High cost for maintenance

anywhere and anytime

It takes shorten time for any The system can be infected by

banking process viruses

Needed accountant and Member of workers have to be

assistants also 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 manual accounting, we check the journal and then we
transfer figures to related accounts' debit or credit side
through manual posting.
• 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.
Traditional/ Manual system of accounting

Data and Manual

information
instructions processing
• 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
• 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.
• 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.
Computerized Accounting:
• Accounting is a formal method used by businesses to
collect, organize, process and summarize data for reports
and statements.
• Accounting is used to keep track of business trends and
to report relevant facts within the business.
• Computer and business software allow more efficient
processing and organization of data.
• Computerized Accounting is software that runs on a
computer equipment to record, store and analyze
information on financial transactions from internal and
external operations of both small and large businesses.
• Financial reports are automatically generated at the end
of each accounting period of a given company.
• The computerized accounting eliminates paper work
making it easier and faster to collect, store and trail all
transactions as they occur.
Benefits of Computerized Accounting System
• Performing business accounting on paper ledgers is an
extremely complicated process.
• Business accountants must track endless details such as
an operating budget, accounts payable and receivable,
taxes and other expenses and compliance with
governmental regulations.
• Even in a small business, manual accounting can quickly
done by one person, and a full-time accounting staff is not
inexpensive.
• For simplicity, cost reduction and peace of mind, consider
switching to a computerized accounting system.
• A computerized accounting system has many benefits,
including:
• Improved Reporting To Financers - many projects have
more than one funding source, each with specific and
different requirements such as: assisting with compliance
with charity regulations, etc.
• Minimal sign Mathematical Errors - with computers
doing the mathematics, errors are virtually eliminated
(unless the data is keyed in improperly in the first
instance).
• Better Record Keeping - human error can still corrupt
your data e.g. entering figures in wrong fields, a good
package will reduce this possibility and ensure that there
is a reference for all transactions e.g. for every cheque or
receipt entered/created.
• However, this does not eliminate all manual work.
Vouchers, invoices, receipts etc. will still need to be filed
in a logical order and details of what was entered onto the
system should also be recorded on paper.
• This will help when you need to track errors, in the annual
audit and if disaster strikes and you have to re-enter all
transactions.
• Automated Report Generation - Accounting software
has the ability to generate reports on demand--something
that could take a team of humans hours or days.
• These reports can be customized to what the company is
spending money on, such as rent, day-to-day operations,
salaries and marketing. In addition, when used properly,
this feature can assist the business in its budgeting
needs, telling executives in a quick and easy to use
format exactly where their money is going.
• Reports empower executives to make informed decisions,
and having instant access to them can only make success
more likely.
• Data Security - For record-keeping and compliance with
the law, businesses often must keep financial records for
years.
• It is extremely difficult to keep copies of paper records in
multiple locations, and a catastrophic incident that results
in the destruction of paper records can damage a
business in many ways.
• With a computerized accounting solution, files and
important financial information can be stored online or on
off-site data cartridges--or both--giving a business the
level of redundancy that it needs to recover from a
catastrophe and ensuring compliance with all applicable
data retention laws.
• Faster and efficient in processing of information;
• Saving Time - with fewer errors and the software
automatically generating reports, time will be saved in the
long run.
• Saving Money - even though there will be the immediate
cost of the software, you are potentially saving the costs of
unnecessary audits as well as saving money through time
saved.
• Limiting Human Error - The biggest advantage of
accounting software for businesses is that most software
available has an automated system that checks for
mathematical errors.
• Errors in accounting can occur easily when done by hand.
• When errors do happen, they can create chain reactions that
cost a company untold amounts of money and time as they
must determine how the error occurred, what other areas of
the business's finance it affects and how to prevent similar
errors in the future.
• Lower Cost - Accounting can become expensive for
businesses, as the level of work can result in the
businesses needing to hire an accounting service on
contract or hire several full-time employees.
• Accounting software eliminates much of the manual work,
which may allow you to reduce your full-time staff and
lower your costs.
• Indeed, because so many tasks can be automated, a full-
time accountant may not be necessary at all.
• With the larger reductions in the cost of hardware and
software and availability of user-friendly accounting
software package, it is relatively cheaper like maintaining
a manual accounting system;
• More timely information can be produced;
• No more manual processing of the data- all automatically
been posted to the various ledgers/accounts and
• Many types of useful reports can be generated for
management to make decisions.
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.
Thank You