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Unit -1: Computerised 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., Meaning of Computerised Accounting: It refers to the system of maintaining accounts using, computers.It involves the processing of accounting transactions through the use of, hardware & softwarein order to keep and produce accounting records & reports., OBJECTIVE OF COMPUTERIZED ACCOUNTING:, 1. Labour Saving: It refers to annual savings in labour cost or increase in the volume of work, handled by the existing staff., 2. Time Saving: 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., 3. 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., 4. 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., 5. 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., scope of computerized accounting:, 1. In Financial Accounting Area, 2. In Costing Accounting Area, 3. Management Accounting, 4. In Management Information system, 5. Statutory Compliance, 6. Computerised Accounting information system, 7. Cloud Accounting (Recent technology)
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8. Inventory Management, 9. Personnel Management, 1. In Financial Accounting Area: If accountant will pass voucher entries, financial accounts will, automatically be created by computer software. Examples: * Multiple companies, * Multiple currency * Multiple financial years * Multiple languages * Cost centres, * Instant BRS * Multi Columnar reporting * Payroll Management etc., 2. In Cost Accounting Area: Budgeting & accounting is critical in the construction process., Construction technology software packages have integrated cost estimation programs for, projects. This includes information for project materials, work orders, contractor rates &, miscellaneous fees, such as site inspector cost, equipment rentals, engineering costs,, Classification of cost, Additional Cost of manufacturing, Job Costing, Process Costing, Multiple, locations, Service costing & Stock valuation., 3. Management Accounting is that accurate and up-to-date financial information will help, organizations make better decisions. Better decisions typically lead to improvements in, profitability, efficiency, and customer satisfaction. examples: Financial statement Analysis,, Ratio Analysis, Cash flow statement, Funds flow statement, Report breaks up and, synchronisation & Responsibility accounting through budgetary control., 4. In Management information system: It is a digitised database where all the financial, information of a company is organised and input in the system. With its help, the program can, execute daily reports on management operations of a company. Examples: Aids in faster, decision making (Instant, Accurate & faster data), Aids in planning (Provides comprehensive, information), Collection and Storage of information (Handles large volumes of data) &, Evaluation of performance (standards performance measurement corrective measures)., 5. Statutory Compliance: It ensures that the tax submissions made to the Indian government be, easy and accurate by helping our clients meet their compliance obligations. Examples: TDS,, TCS, GST & Auditors version., 6. Computerised Accounting information system: It is a software that helps businesses to, manage the big financial transactions, data, reports, and statements with high efficiency, speed, & better accuracy. Examples: Increase functionality (All kind organisation supportive),, Improved Accuracy (Sophisticated computer programming), Faster Processing (Advent of, Computer speed), Better External reporting (Multi format) & Improved efficiency, (Standardisation of functions), 7. Cloud Accounting (New Technology): It is users access software applications remotely, through the Internet or other network via a cloud application service provider. Using cloud
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accounting software frees the business from having to install and maintain software on, individual desktop computers. Examples: Real time processing, Multi user environment,, Machine learning, Deep learning & Artificial intelligence., 8. Inventory Management: It enables the business to handle operations related to inventory in, real-time throughout the day. Inventory management software helps in recording incoming, and outgoing stock, materials etc. Examples: Multiple Stock Valuation, Stock Categories, Stock, Ageing Analysis & Stock movement analysis, 9. Personnel Management: Human resources are the part of the whole system. They are, working in all functional areas of the organisation manufacturing, marketing, sales, finance,, logistics, research and development, advertising, etc. Examples: Organizational Functions like, Recruiting, hiring & assisting an entity’s workforce, Employment function, Training &, Development function, Job analysis, Merit rating, Job evaluation & compensation., Requirements of Computerised Accounting:, 1. Operating framework: it is a well – defined operating procedure made according to the, operating to the organisation. Examples: People, System analysts, programmers, operators &, Procedures., People: The most important element of a computer system is its users. They are also called, live-ware ofthe computer system. The following types of people interact with a computer, system., System analysts: People who design the operation and processing of the system., System programmers: People who write codes and programs to implement the, working of thesystem., System operators: People who operate the system and use it for different purposes., Procedure: Procedure is a step-by-step series of instructions to perform a specific, function and achievedesired output. In a computer system there are three types of, procedures., , 2. Accounting framework: It consists of principles, grouping and Coding structures of, accounting. Hardware & Software., Hardware oriented procedure: It defines the working of a hardware component., Software oriented procedure: It is a set of detailed instructions for using the software.
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Internal procedure: It maintains the overall working of each part of a computer, system bydirecting the flow of information., , Data: The facts and figures that are fed into a computer for further processing are, called data. Data are raw input until the computer system interprets them using, machine language, stores them in memory, classifies them for processing and, produces results in conformance with the instructions given to it. Processed and useful, data are called information which is used for decision making., Connectivity: When two or more computers are connected to each other, they can, share information and resources such as sharing of files (data/music, etc), sharing of, printer, sharing of facilities like the internet. This sharing is possible using wires,, cables, satellite, infra-red, Bluetooth, microwave transmission, etc., Hardware: The physical components of a computer constitute its hardware. Hardware, consists of input devices and output devices that make a complete computer system., Examples of input devices are keyboard, optical scanner, mouse, joystick, touch screen and, stylus which are used to feed data into the computer. Output devices such as monitor and, printer are media to get the output from the computer., Software: A set of programs that form an interface between the hardware and the user of, a computer system are referred to as software. The following are the various types of, software:, System software: A set of programs to control the internal operations such as reading data, from input devices, giving results to output devices and ensuring proper functioning of, components is called system software. The system software includes the following:, Operating system: A set of tools and programs to manage the overall working of a, computer using a defined set of hardware components is called an operating system. It is, the interface between the user and the computer system. Example: DOS, Windows,, UBUNTU, iMac, etc., Programming software: Special software to accept data and interpret them in the form, of machine/assembly language understandable by a computer. Example: C, PASCAL,, COBOL, etc., Utility software: These are designed specifically for managing the computer device and, its resources. Example: File manager, Anti-virus software, etc., Application software: Programs designed to perform a specific function for a user. An, application software can be classified as follows:
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General purpose software: This type of application can be used for a variety of tasks, and notlimited to one particular function. Example: MS-Office., (ii) Specific purpose software: This software is created to execute one specific task, and they are customized to the needs of user. Example: Accounting software, payroll, software, etc., Accounting Software are as follows:, , 1. Tally. ERP 9: tops our list of accounting software as an end-to-end solution to GST statutory, regulations as current reformer changes get in the financial accounting system of India. Tally is, equipped with error detection capabilities that minimize any chances of rejection in GST returns., Starting from creating invoices, creating ledgers, printing cheques, stock aging analysis, cost, estimates, profit analysis, auto bank reconciliation, or any critical overviews; Tally is your, business acquiescence partner. As your business grows, Tally helps in generating instant reports, and makes quick decisions. Tally is a simplified yet unique solution that allows the business to, handle accounting and manufacturing details by implementing minimum resources., B E N E F I T S O F T A L L Y . E R P 9 : 1 . Manage your Accounts easily. 2. Your One-Stop GST Ready, Solution. 3. Banking made easy for you. 4. helps in making business decisions., 2. MS Excel: is an important tool that can help finance and accounting professionals create, reports, analyse data, and prepare financial strategies. Although you may have a basic, knowledge of Excel, you might not know about specialized functions that can make your job, easier., BENEFITS OFMSEXCELL:, 1. Administrative Assistant: it required to do different tasks such as make spreadsheets, schedule, appointments, organize different documents, put in vacation time in for employees, and, more. Each and every one of these duties will require you to need to have a basic knowledge of, Excel., 2. Accountants: You’ll be hard-pressed to become an accountant without at least a bachelor’s, degree. On top of having a degree, you’ll also need to have some experience with, Excel. Besides helping you organize numbers you can also use the formula function to do all, your math right there in the spreadsheet. It’s more than a little bit convenient., 3. Retail Manager: You’ve got to be able to keep up with staff information such as pay, vacation, days, and sick days. Even scheduling your employees and keeping up with when they clock in
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and clock out is done via Excel. On top of keeping tabs on your staff, you’ll have to use Excel to, stay up to date with sales records and monitor your inventory., 4. Cost Estimator: you’ll be working with contractors and project managers. You’ll sit down, with them and talk to them about the money, time, and labour needed to finish each of their, projects. You’ll be using Excel to calculate all of these estimates and show it to them., 5. Financial Analyst: Excel spreadsheets will help you keep up with the latest investments and, business trends. You’ll look over these trends on a daily basis so you can write up reports and, help businesses make all their important financial decisions., 6. Project Manager: do work with cost estimators but that doesn’t mean they don’t have to, keep up with spreadsheets of their own. You’ll need them to help you with the day-to-day, operations, organize your vendors, manage all financial information, and write out reports., 7. Business Analyst: you’ll be in charge of keeping tabs on a large amount of company data. The, slightest hiccup can mean big trouble for a business. That’s where Excel comes in. You can hold, all your data in one place and keep it organized. This way you can easily flip through the data,, study it, and use it without losing anything., 8. Data Journalist want all of their resources to be credible. If not then their stories may, suffer. You’ll have data thrown at you on a daily basis. It can be hard to keep up with if you, don’t have some type of software. Instead of going out and buying expensive tools, most data, journalists turn to Excel., 9. Information Clerk: It provide customers with information regarding a business or product., They also collect a variety of data and make reports based on it., 3. QuickBooks India: New age businesses look forward to embracing accounting software that, provides seamless, comprehensive data on one single tool. QuickBooks India is the, comprehensive modern accounting management tool which offers you the best for your, business. The software allows enterprises to track sales, create and send invoices, and derive a, database from the cloud-based portal. QuickBooks is for novice users and does not require any, expertise in financial accounts handling. The software is equipped with powerful invoicing, features, payment reminders, sales, and inventory tracking, auto banking resolution, and easy, navigation interface. QuickBooks simplifies tasks and provides a 360-degree view of the, business from anywhere., BENEFITS OF QUICKBOOKS INDIA:
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1. Access your account, manage your business, and stay organized anytime, anywhere on your, computer, mobile or tablet. 2. Create custom, professional invoices, sales receipts and, estimates that you can send in minutes. 3. With the QuickBooks Online banking integration, feature, your statements and transactions will automatically update., 4. MargERP 9+: MargERP 9+ is a GST enabled inventory and accounting software in India that, makes GST billing and filing easy. Generate batch wise invoice, get detailed information on a, business transaction, avail auto bank reconciliation, encode and centralize barcode, and push, GST transaction on the portal. MargERP 9+ helps in selecting the right GST slab and segregate, transactions accordingly. The software directs detailed and automates calculations of SGST,, CGST, and IGST. MargERP9+ is a trade specialized solution that is highly affordable in price and, customizable in features. With more than 2500 software configuration and 500 tutorial videos,, the software is easy to implement and lets you build functionality to business support., BENEFITS OF MARGERP 9+:, 1. It help to file GST returns easily. 2. The local centres help in implementing the software easily., 3. It demands and supports the most unique business models. 4. Its collaboration between, suppliers and business. 5. It allows timely advancements and innovations., 5. Vyapar: Vyapar tops the list of accounting software for small Indian businesses. The, accounting software is a free platform that allows maintaining invoice, getting inventory records,, managing books of accounts, and tracking daily business activities while focusing on business, growth rate. The software eliminates paperwork and helps business management to utilize, productive time on business development. Since most of the small sector business needs a digital, upgrade, Vyapar acts as an effective solution. Vyapar is GST compliant and allows error-free tax, returns while eliminating errors occurred with manual calculations. Vyapar takes charge to, control individual units of the business, creates customizable invoices, and automates payment, reminders., BENEFITS OF VYAPAR:, 1. Become GST compatible. 2. Manage all parties in one single place and market business much, easily. 3. Set up “Auto Backup” and secure business accounting data against accidental data loss, and Do business accounting offline without internet. 4. It supports offline accounting features., 5. Track business performance and control individual units., 6. myBooks: myBooks accounting software is an excellent accounting solution for entrepreneurs,, accountants, small IT and financial companies and freelancers. myBooks GST Accounting, Software is designed for all small business owner, you can use myBooks GST software for any
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kind of small business. All accounting transactions using this GST Accounting software can, eliminate your accounting work stress. mybooks designed from the small business owners’, perspective, we kept easy user experience as the central objective in designing our product. So,, there will not be any need for formal training. It also has helpful tips around the product so that, you can discover features and functionalities very easily., BENEFITS OF MYBOOKS ACCOUNTING SOFTWARE:, 1 . GST Compliance Made Easy. 2. Easy Bank Reconciliation. 3. Backup & Security. 4. Free Mobile, Apps. 5. Financial report & Dashboard., 7. Busy Accounting Software: Busy is an integrated Windows-based accounting software that has, been created to bring a reform in the computerized accounting system. With the primary, objective of providing digitalization and offering a computerized software solution, Busy has, become one of the top online accounting software in India. Busy was curated by a group of IT, professionals with a motive that focused on the development of business accounting. The, software has received an overwhelming response from the Fortune companies in India. Busy, Accounting Software caters a range of accounting software apps that cater to the need of, different business segments. The software is available in three different segments that suit, micro, small, and medium scale enterprises., BENEFITS OF BUSY ACCOUNTING SOFTWARE:, 1. Financial Accounting (Multi-Currency): Busy is one of the top accounting software that, features multi-currency accounting. This opens up the option for globalized companies that have, branches worldwide., 2. GST Invoicing and Reports: Busy is featured packed with advanced tools that assist business, in filing tax returns easily and analyse profit reports., 3.MIS reports & Analysis: Top level management can rely on MIS reports and analysis of everyday, management activities. It helps in keeping a track on work progress and make quick decisions, relying on the reports generated., 8. Logic: Logic is an online accounting software in India that satisfies the demand of having a, strategic ERP system in the accounting and financial module. Business managers look forward to, grabbing an insight into financial reports that align in quick decision making. Logic is advanced, computerized software which facilitates error-free financial management, budgeting, and, planning, assists forecasting, renders efficient performance analysis and integrates general, ledger and accounting data. Business management can hold cross-communication with different
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departments and facilitate collaborations across business delegates using comprehensive data, offered by Logic. The software enlightens business success with its powerful consolidated tools, that manage Human resources, inventory, and accounting., BENEFITS OF LOGIC, 1. Powerful financial consolidation tools. 2. Generate financial reports, Balance sheets, and Profit, and loss statements on the go. 3. Proper cash management, asset management, cost-effective, human resource management., 9. Profit Books: Profit Books is among the top 10 accounting software in India which offers, complete inventory management and detailed tax reports that help in stabilized controlling of, the business. For a growing company, financial planning and inventory management is equally, important in alignment to get sales and product insights. Whether you are a manufacturing unit,, wholesaler, or retailer, Profit Books offers a steady platform to track management process and, file tax returns. From managing income and expense statements to tracking the entire cash flow,, Profit Books serve as the best accounting and inventory management solution. Profit Books has, been a saviour to many upscale businesses and new ventures for its vividly advanced features., BENEFITS OF PROFITBOOKS, 1. To send invoices and track bills for inventory flow and manage outstanding dues., 2., It enables detailed taxation reports & helps in filing tax easily. (Service Tax, VAT & GST). 3. It, allows the complete profit and loss statements for better understanding of business operations., 10. Saral: Saral is an online accounting software in India that deals in accounting and billing, system Being a one of the most comprehensive software, Saral manages to be user-friendly and, an integrated platform which manages to cover every essential point for your accounting and, billing requirements. From inventory management to generating MIS reports, Saral covers it all!., Saral is GST compliance and enables tax filing with easy returns. Apart from being the most, comprehensive business solution, Saral offers service invoice, inventory management and, generates auditors report for the enterprise. The software comes with different slab rates to suit, the requirements of a business. Along with statuary compliance, the software covers barcode, integration and generation for product pricing and tracking as well., BENEFITS OF SARAL:, 1 . It allows the GST computation for monthly GST-1 and GST-2 return filing., 2., It is a complete accounting and billing software with perfect feature services., 3. It, keeps a track of complete inventory details that include product pricing and encoding barcodes.
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Difference Between Manual and Computerized Accounting:, Basis for, comparison, Meaning, , Manual Accounting, , Computerized Accounting, , Speed, Adjusting, entries, Backup, , Manual Accounting is a system of, accounting that uses physical registers, and account books, for keeping, financial records., Recording is possible through book of, original entry., All the calculation is performed, manually., Slow, It is made for rectification of errors., , Computerized Accounting is an accounting, system that uses an accounting software,, for recording financial transactions, electronically., Data content is recorded in customized, database., Only data input is required, the calculations, are performed by computer system., Comparatively faster., It cannot be made for rectification of errors., , Not possible, , Trial Balance, , Prepared when necessary., , Financial, Statement, , It is prepared at the end of the period,, or quarter., It involves the storage of financial data, in a large volume of books, It is difficult and time-consuming to, recover manual data as there are bulk, of journals have to be gone through,, and they may get deteriorated with, time, Manual accounting is much cheaper, than the computerized accounting and, requires basic necessities like a pen,, paper, journals, etc., , Entries of transactions can be saved and, backed up, Instant trial balance is provided on daily, basis., It is provided at the click of button., , Recording, Calculation, , storage, Recovery of, Data, , Cost, , It involves the storage of financial data in, well-designed databases, It is much easier to recover data as the, records are kept in soft copy in the, database, and all the data can be backed up, It is expensive to buy accounting software,, and the system also requires maintenance., It also needs other supplies, such as, printers, papers, inks, etc., , Advantages of Computerised Accounting:, 1. Better Quality Work: The accounts prepared with the use of computerized accounting, systemare usually uniform, neat, accurate, and more legible than a manual job., 2. Lower Operating Costs: Computer is a reliable and time-saving device. The volume of job, handled with the help of computerized system results in economy and lower operating costs., The overall operating Cost of this system is low in comparison to the traditional system.
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3. Improves Efficiency: This system is more efficient in comparison to the traditional system., The computer makes sure speed and accuracy in preparing the records and accounts & thus,, increases the efficiency of employees., 4. Facilitates Better Control: From the management point of view, there is greater control, possible and more information may be available with the use of the computer in accounting., It ensures efficient performance in accounting records., 5. Greater Accuracy: Computerized accounting make sure accuracy in accounting records and, statements. It prevents clerical errors and omissions in records., 6. Relieve Monotony: Computerized accounting reduces the monotony of doing repetitive, accounting jobs. Which are tiresome and time-consuming., 7. Facilitates Standardization: Computerised accounting provides standardization of, accounting routines and procedures. Therefore, it ensures standardization in the accounting, records., 8. Minimizes Mathematical Errors: While doing mathematical work with computers, errors, are virtually eliminated unless the data is entered improperly in the system., 9. Legibility: The data displayed on computer monitor is legible. This is because the characters, (alphabets, numerals, etc.) are type written using standard fonts. This helps in avoiding errors, caused by untidy written figures in a manual accounting system., 10. Efficiency: The computer- b a s e d accounting systems ensure better use of resources and, time. This brings about efficiency in generating decisions, useful information’s and reports., 11. Quality Reports: The inbuilt checks and untouchable features of data handling facilitate, hygienic and true accounting reports that are highly objective and can be relied upon., 12. speed: Accounting data is processed faster by using a computerized accounting system, than it is achieved through manual efforts. This is because computers require far less time, than human beings in performing a task.
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Disadvantages of Computerized Accounting:, 1. Reduction of Manpower: The introduction of computers in accounting work reduces, the number of employees in an organization. Thus, it leads to greater amount of, unemployment., 2. High Cost: A small firm cannot install a computer accounting system because of its, high installation and maintenance cost. To be more economical there should be large, volume of work. If the system is not used to its full capacity, then it would be highly, uneconomical., 3. Require Special Skills: Computer system calls for highly specialized operators. The, availability of such skilled personnel is very scarce and very costly., 4. Other Problems: Frequent repair and power failure may affect the accounting work very, much. Computers are prone to viruses. Often time's people will assume the computer is, doing things correctly and problems will go unchecked for long period of time., 5. Cost of Training: The sophisticated computerised accounting packages generally require, specialised staff personnel. As a result, a huge training costs are incurred to understand, the use of hardware and software on a continuous basis because newer types of hardware, and software areacquired to ensure efficient and effective use of computerised accounting, systems., 6. Staff Opposition: Whenever the accounting system is computerised, there is a significant, degree of resistance from the existing accounting staff, partly because of the fear that they, shall be made redundant and largely because of the perception that they shall be less, important to the organisation., 7. Disruption: The accounting processes suffer a significant loss of worktime when an, organisation switches over to the computerised accounting system. This is due to changes, in the working environment that requires accounting staff to adapt to new systems and, procedures, 8. System Failure: The danger of the system crashing due to hardware failures and the, subsequent loss of work is a serious limitation of computerized accounting system., However, providing for back-up arrangements can obviate this limitation. Software, damage and failure may occur due to attacks by viruses. This is of particular relevance to, accounting systems that extensively use Internet facility for their online operations. No, full-proof solutions are available as of now to tackle the menace of attacks on software by, viruses., Features of computerized accounting:, 1. Simple and integrated: It is designed to automate and integrate all the business, operations such as purchase, sales, finance, inventory and manufacturing. The CAS may be, integrated with enhanced Management Information System (MIS), multi-lingual and data
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organisation capabilities to simplify all the business processes of the organisation easily, and cost-effectively., 2. Speed: It can perform functions at much higher speed than doing the same manually., 3. Accuracy: Computers perform functions with high degree of accuracy. If hardware,, software and input bypeople are proper, the computerised accounting system can assure, of accurate outcome., 4. Reliability: Computers are used to process large volumes of data and hence, data, provided by it are reliable., , 5. Versatility: Computer and accounting software have the ability to perform diverse tasks., For example, by simply recording accounting entries through accounting software, one can, get trial balance, trading account, profit and loss account, balance sheet and diverse, reports., 6. Transparency: With computerised accounting, the organisation will have greater, transparency of day-today business operations and access to the vital information., 7. Scalability: computerized accounting enables processing of any volume of data in tune, with the change in the size of the business., , 8. On-line facility: computerized accounting offers online facility to store and process, transaction and data so as to retrieve information to generate and view financial reports in, any part of the world., 9. Security: In computerized accounting, only the authorised users are permitted to have, access to accounting data. Under manual accounting system, it is very difficult to secure, such information as it is open to inspection by any person dealing with the books of, accounts.
