CH1: question & answer

1. What is a Computerized Accounting System (CAS)?

A Computerized Accounting System (CAS) is an accounting information system that processes
financial transactions according to Generally Accepted Accounting Principles (GAAP) to
produce reports tailored to user requirements.
2. What are the five pillars or components of a Computerized Accounting System?
 Procedure: refers to the logical sequence of actions to perform a task.
 Data: is the raw financial information input into the system.
 People: are the users who interact with the system.
 Hardware: consists of the physical devices like computers. System software and Application
software.
 Software: includes the system software and Application software.
3. What types of reports can be generated from transactions processed through accounting
software?
1. Day books/Journals
2. Ledger
3. Trial Balance
4. Position Statement (Balance Sheet)
5. Statement of Profit and Loss (Profit and Loss Account)
4. What are the basic requirements for a computerized accounting system?
1. Accounting Framework: A set of principles and structure for coding and grouping
accounting data.
2. Operating Procedure: A well-defined procedure that blends with the organization’s
operating environment.
5: What are the four basic parts of a database-oriented application? ( NB)
1. Front-end Interface: This is what users see and use. It includes buttons and forms that
let people enter information and look at data easily.
2. Back-end Database: This is where all the information is stored. It keeps the data safe
and allows the application to find and update it when needed.
3. Data Processing: This part takes the information that users enter and changes it into a
format that can be saved or used. It makes sure the data is correct before it goes into the
database.
 4. Reporting System: This creates reports from the data in the database. It helps users see
important information and understand it better.
6: accounting: is the process of identifying, recording, classifying, and summarizing financial
transactions to create financial reports.
7: How are transactions identified in manual and computerized accounting?
In both systems, transactions are identified using accounting principles.
8: How are transactions recorded in each system?
 Manual Accounting: Transactions are recorded in books.
 Computerized Accounting: Data is stored in a digital database.
9: How are transactions classified?
 Manual Accounting: Transactions are posted to ledgers, which can lead to duplicate
data.
 Computerized Accounting: Data is classified without duplication.
10: How are transactions summarized?
 Manual Accounting: Summarizes by creating a trial balance that requires ledger
accounts.
 Computerized Accounting: Generates a trial balance directly from stored data.
11: What are adjusting entries?
 Manual Accounting: Adjusting entries match expenses to revenues and correct errors.
 Computerized Accounting: Uses journal vouchers but doesn’t require all types of
adjustments.
12: How are financial statements prepared?
 Manual Accounting: Needs a trial balance before preparing financial statements.
 Computerized Accounting: Can create financial statements directly from transaction
data.
13: How is the closing of books handled?
 Manual Accounting: Involves posting closing entries. Temporary accounts are closed,
revenue to income summary, expense to income summary, also income summary &
drawing to capital.
  Computerized Accounting: is automatically being prepared since its closing data are
saved.
14: Advantages of Computerized Accounting
1. Speed: Computerized systems work much faster than manual methods.
2. Accuracy: Data is entered only once in computerized systems, which means fewer
mistakes. Manual systems often require repeated entries, increasing errors.
3. Reliability: Computers can do the same tasks over and over without getting tired.
4. Up-to-Date Information: Records are updated automatically when new data is entered.
5. Real-Time User Access: Many systems let multiple users view and work with the same
information at the same time.
6. Easy Report Generation: Reports can be created quickly with just a click.
7. Scalability: Computerized accounting can easily handle more transactions without
needing a lot of extra staff.
8. Clear Display: Information on computer screens is clear and easy to read,
9. Efficiency: Computerized systems make better use of time and resources,
10. Quality Reports: Built-in checks help ensure that reports are accurate and trustworthy,
11. Management Reports: Computerized systems can quickly create reports for managers,
12. Space-Saving Storage: Digital storage takes up less space than paper records and allows
for quick access to information when needed.
13. Employee Motivation: Training on new systems can make employees feel valued,
increasing their interest in their work.
16: Limitations of Computerized Accounting
1. Cost of Training: Training employees to use computerized systems can be expensive.
2. Staff Opposition: Employees often resist changes to computerized accounting because
they fear losing their jobs.
3. Disruption: Switching to a computerized system can cause a loss of work time.
Employees need time to learn the new processes.
4. Risk of System Failure: Computer systems can crash due to hardware problems, leading
to lost work.
 5. Inability to Detect Unexpected Errors: Computers can’t find unexpected mistakes like
humans can.
6. Security Breaches: It’s hard to spot unauthorized changes to data, making fraud easier.
7. Health Issues: Long hours in front of computers can lead to health problems, like back
pain and eyestrain.
CH2
1: Source documents: are the physical basis upon which business transactions are recorded.
2; Business documents refer to all the files, documents, papers, books, reports, records, letters,
etc. related to the business. They usually contain:
1. A description of a business transaction
2. The date of the transaction
3. A specific amount of money
4. There may also be an authorizing signature
5. Name of the business
6. Stamped
7. Reference number
3: What is the purpose of invoice verification, and what are the three main methods used in
the process?
Invoice verification ensures that the products or services received match the details listed on the
supplier’s invoice. This process helps businesses avoid overcharges, detect discrepancies or
fraud, and maintain good financial controls in managing accounts payable.
4: The three main methods used in invoice verification are:
1. Checking Purchase Orders – Compares the invoice details with the original purchase order
to detect mismatches in price, quantity, or items.
2. Checking Goods Receipts – Matches the invoice with the goods received note (GRN) or
delivery note to ensure the right items and quantities were delivered.
3. Special Cases – Used when invoices involve complex pricing structures like volume
discounts or contract-based pricing. In such cases, stakeholders verify invoice legitimacy
before payment.
5: Types of accounting source document
What are some key accounting source documents used in a purchasing process, and what
roles do they play?
 1. Purchase Requisition Form: An internal request made by an employee to acquire goods
or services, initiating the procurement process.
2. Quotes: Price offers from different suppliers; used to choose the most cost-effective
option before placing an order.
3. Order Forms/Purchase Orders: Documents used to formally request goods from
suppliers.
4. Sales Orders: Issued by the supplier to confirm the buyer’s order.
5. Delivery Dockets: Sent with goods to allow the buyer to check deliveries against their
order.
6. Goods Received Note (GRN): Confirms receipt of goods and is used to verify delivery
quantity and quality.
7. Invoices: Issued by the seller, containing sale details and payment terms; used for
recording transactions in both buyer and seller systems.
6: What is a debit note and when is it used?
A1: A debit note is made by the buyer when they return goods to the seller. It shows that the
buyer wants to pay less because of the return. It is used when goods are sent back or there is a
mistake. It helps reduce the amount the buyer has to pay.
7: What is a credit note and why do sellers use it?
A credit note is made by the seller to fix a mistake in a bill (invoice) or when goods are returned.
It is used if the goods are damaged, wrong, or if the price was wrong. It helps reduce the amount
the customer has to pay.
8: What is the common payment-related source documents in accounting, and what is their
purpose?
1. Remittance Advice – This is a note the customer sends to the seller to explain which
invoices they’re paying. It helps the seller know exactly what the money is for.
2. Receipt – Given by the seller to confirm they got the payment. It’s especially useful
when the buyer pays in cash.
3. Cheque – A paper payment written from the customer’s bank account. It needs to be
signed and handled carefully to avoid fraud.
4. Deposit Slip – Used by the seller to show how much money (cash or cheques) they’re
putting into the bank.
5. Other Documents – These can include agreements like loans or leases, showing how
much needs to be paid and when.
CH3
1: QuickBooks is an accounting software package developed and marketed by Intuit. It was
first introduced in 1992 and is mainly used by small and medium-sized businesses.
QuickBooks offers both desktop and cloud-based versions, which help businesses with:
 Accepting payments
 Managing and paying bills
 Handling payroll functions
2: Importance of QuickBooks
1. Financial Management: Helps manage invoicing, expense tracking, payroll, and
reporting.
2. Bookkeeping: Allows easy recording of financial transactions like income and expenses.
3. Invoicing & Payments: Create and send invoices, track payments, and accept various
payment methods.
4. Payroll: Manage salaries, taxes, and deductions.
5. Reporting: Generate customizable reports like Profit & Loss, Balance Sheet, and Cash
Flow.
6. Inventory Management: Track inventory levels, reorder points, and costs.
7. User Access: Set different user access levels to keep data secure.
8. Tax Preparation: Organize financial data to prepare for tax season.
9. Integration: Connect with banks, payment systems, and other business tools.
3: What are the main types of QuickBooks and how are they different?
 QuickBooks Desktop – Installed on a computer. It has versions like Pro, Premier, and
Enterprise. Good for businesses that want offline use.
 QuickBooks Online – Used with the internet. You can open it anywhere. It has plans like
Simple Start, Essentials, Plus, and Advanced. Good for teamwork and remote access.
4: What basic accounting ideas does QuickBooks use and why are they important?
QuickBooks uses these basic accounting ideas:
 Double-entry – Every transaction affects two accounts (e.g., income and bank).
 Chart of Accounts – A list of accounts to track money in and out.
 Cash vs Accrual Accounting – Cash records when paid, accrual records when earned.
 These help you make reports like Profit & Loss, Balance Sheet, and Cash Flow, which
show if the business is doing well.
5: What are the basic ideas in QuickBooks and why are they useful?
1. Double-entry: Every money move affects two accounts.
2. Chart of Accounts: A list of where money goes (like income, expense, bank).
3. Cash vs. Accrual:
o Cash: Record when money is paid or received.

o Accrual: Record when work is done, not when paid.

4. Financial Reports:
o Profit & Loss – shows income and expenses.

o Balance Sheet – shows what you own and owe.

o Cash Flow – shows real cash in and out.

Discuss various health problems that may come from using computer systems too much? (3
marks)
Using computers for long hours may cause some health problems, including:
 Eyestrain – Looking at a screen too long can hurt your eyes.
 Back and neck pain – Sitting badly or too long can hurt your back or neck.
 Hand or wrist pain – Typing too much can cause pain or swelling (like carpal tunnel).
What documents should the procurement department give the accountant before buying
the vehicle? (Vehicle cost: $10,000) (5 marks)
1. Purchase Requisition Form – A request to buy the vehicle.
2. Quotation or Supplier Quote – Price offer from the seller.
3. Purchase Order (PO) – The formal order sent to the seller.
4. Delivery Docket – Confirms that the vehicle has arrived.
5. Goods Received Note (GRN) – Confirms the vehicle matches what was ordered.
6. Invoice – The bill from the seller showing amount to be paid.