N.C. Autonomous College.

1
Jajpur

INTRODUCTION TO COMPUTERIZED
August 5,
2024
ACCOUNTING
 INTRODUCTION TO
COMPUTERIZED
ACCOUNTING

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2024
3 Automation Of Accounting
Process
 What exactly do you mean by ‘Automation of
accounting process’?

 In simple terms it means to carry out the

accounting function ( for example, recording
of business transactions, calculating accurate
accounting information) by means of an
accounting software where human
intervention is minimum.

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2024
How far is the human intervention restricted
4 in this process?

 Human intervention cannot be eliminated

completely.
 Accounting involves accounting procedures
and principles which the computer simply
can’t implement by itself. That is to say a
computer can not take decisions by itself
other than operating on a set of pre-defined
instructions. For example, to decide which
account in a particular business transaction
is to be credited/debited. August 5,
2024
5 What is Computer Based
Accounting?

 Carrying out functions in the accounting process using a

computer software.

There are three ways of computer based accounting.

 Using a spread sheet package (e.g. Ms Excel)
 Using a Accounting Software Package (e.g. Sage)
 Using an Enterprise Resource Planning System – ERP (e.g. SAP)

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2024
6

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

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2024
7

TRADITIONAL/MANUAL SYSTEM OF
ACCOUNTING

Processing
• Data • Information
• Instructions • Manual
processing

INPUT Output

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2024
8

PROCESS OF COMPUTERISED ACCOUNTING

Processing
• Data & instructions • Profit & Loss
• -Cheques/Receipts A/c
• Electronic
• -Debit Notes Processing • Balance Sheet
• -Credit Notes Through
• -Invoices Computers
Output
INPUT

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2024
9 Salient Features of Computerized
accounting

1. Fast, Powerful, Simple and Integrated

Computerized accounting is designed
to automate and integrate all the
business operations, such as sales,
finance, purchase, inventory and
manufacturing.
With Computerized accounting,
accurate, up-to-date business
information is literally at the fingertips.

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2024
10 2. Complete Visibility

Computerized accountings giving the

company sufficient time to plan,
increase the customer base, and
enhance customer satisfaction. With
Computerized accounting the
company will have greater visibility
into the day-to-day business
operations and access to vital
information.
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2024
11 3. Enhanced User
Experience
Computerized accounting allows
the company to enter data in a
variety of ways which makes work
a pleasure. Adapting to the
specific business needs is possible.

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2024
12 4. Accuracy, Speed

Computerized accounting has User-

definable templates which provides
fast, accurate data entry of the
transactions; thereafter all documents
and reports can be generated
automatically, at the press of a
button.

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13 5. Scalability

Computerized accounting
adapts to the current and
future needs of the business,
irrespective of its size or style.

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14 6. Power

Computerized accounting has

the ability to handle huge
volumes of transactions
without compromising on
speed or efficiency.

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15 7. For Improved Business
Performance
 Computerized accounting is a highly
integrated application that transforms the
business processes with its performance
enhancing features which encompass
accounting, inventory, reporting and statutory
processes. This helps the company access
information faster, and takes quicker
decisions. Computerized accounting also
guarantees real-time optimization of
operations and enhanced communication.
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2024
16 8. Quick Decision Making

Generates real-time,
comprehensive MIS reports and
ensures access to complete
and critical information,
instantly.

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2024
17 9. Complete Reliability

Computerized accounting makes

sure that the critical financial
information is accurate,
controlled and safe from data
corruption.

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2024
18
COMPUTERISED ACCOUNTING
Advantages Disadvantages

 Accuracy  Initial cost

 Speed  Replacement requirements
 Storage capacity  Human errors
 Cost reduction  System errors
 Up-to-date reports  Problem of security
 Analyzing capabilities  Loss of data
 An artificial device
 Not suitable for small firms
 Requires training on part of accountants

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2024
19
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

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2024
 ACCOUNTING SOFTWARE
20
PACKAGES

General (Tailor-made) Special (Customized)

 MYOB  Stock control
 Account Pro  Systems
 Peachtree/Sage 50  Payroll systems
 DacEasy  General ledger
 ACCPAC  systems
 SAGE  Debtors/Creditors
 Tally  modules
 Quick Book  Cash books

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2024
BASIS MANUAL ACCOUNTING COMPUTERIZED
SYSTEM ACCOUNTING SYSTEM
21

1) IDENTIFYING Identifying the financial It is done manually same

FINANCIAL TRANSACTION transaction is a manual as in the manual
process carried out by an accounting system.
authorized person.

2) RECORDING & Under this the recording After recording the

CLASSIFYING of transactions in Day- financial transaction with
book and then the the help of the
posting them in the accounting software
ledger accounts, manually the remaining
mathematical processes are carried out
calculations are all done automatically.
manually.
3) SUMMARISING In the manual system , In the computerized
the data under each process, a transaction or
ledger is summarized and event, once recorded, is
a balance of each stored in the database
account is ascertained to and can be processed to
prepare Trial balance. produce a trial balance
Hence Ledger accounts directly.
Must be prepared. August 5,
4) ADJUSTMENT ENTRIES It’s passed to rectify an It’s identified and then
error or to follow the done manually under the
22 matching principle. It’s recording process itself.
identified and then done Remaining processes are
manually in the recording as mentioned above.
process itself.

5) Grouping of Accounts Under manual system, at Under the computerized

the time of preparing process, at the time of
financial statements, entering the transaction
CORRECT ACCOUNTING itself it is decided if it’s of
process is followed (i.e. capital/revenue nature
whether a transaction is and which A/c is to be
of capital or revenue credited/debited, that is,
nature and which it’s done manually.
account is to be Remaining processes are
credited/debited). After done automatically.
that is done, it’s grouped
under 1 of the main A/c.
ALL DONE MANUALLY.
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2024
 ACCOUNTING SOFTWARE
23
PACKAGES
Accounting software packages can be supplied in
 Individual (stand – alone) or
 Total Integrated Package

In a stand alone system, modules are purchases separately, the transfer of values
to the GL or to other modules
 Printing control total and posting them
 Creating transfer file for posting

In an integrated system , all modules are supplied together and operated together
 Information created in one module automatically
 flows to other modules
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24
TYPES OF ACCOUNTING SOFTWARE FILE
SYSTEM
 An accounting package organizes an accounting database
comprising a number of files to provide accounting
information required by the users.

These files are fallen into three categories:

 Master files
 Transaction files
 Temporary/ working files

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2024
25 Master Files
Master files contain relatively static data plus some
quantitative values which are periodically updated
by entry of transactions

 Debtors master file

 Creditors master file
 General ledger master file
 Stock master file
 Fixed asset register
 Payroll master file
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2024
26 Transaction Files
Transaction files summarize data
available in source documents,
Purchase/ Sales Orders
Invoices
Return Notes
Receipts

Normally used to update balances in the

master files
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2024
27 Temporary/ Working
Files

Temporary files are short term files, kept

for specific purposes, data in which will
be deleted when the purpose has been
fulfilled.

Suspense Account
Waiting on Bill
Advances Received
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