LECTURE 03
COMPUTERIZED ACCOUNTING AND ITS
FEATURES
COMPUTERIZED
ACCOUNTING:
Computerized accounting system refers to the system of maintaining
accounts using computers. It involves the processing of accounting
transactions through the use of hardware and software in order to keep and
produce accounting records and reports.
Simple and integrated: It is designed to
automate and integrate all the business
operations such as purchase, sales, finance,
inventory and manufacturing.
Speed: It can perform functions at much higher
FEATURES
speed than doing the same manually. OF
Accuracy: If hardware, software and input by COMPUTERIZ
ED
people are proper, the computerized accounting
system can assure of accurate outcome.
Reliability: Computers are used to process large
volumes of data and hence, data provided by it
ACCOUNTIN
are reliable.
G
Versatility: Computer and accounting software
have the ability to perform diverse tasks.
FEATURES OF COMPUTERIZED
ACCOUNTING
Transparency: With computerized accounting, the organization will
have greater transparency of day-today business operations and
access to the vital information
Scalability: It enables processing of any volume of data in tune
with the change in the size of the business.
On-line facility: It: 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.
Security: In computerized accounting, only the authorized users are
permitted to have access to accounting data.
COMPONENTS OF COMPUTERIZED
ACCOUNTING SYSTEM
Components of Computerized
Accounting can be classified
into six categories, namely,
Hardware
Software
People
Procedure
Data and
Connectivity
COMPONENTS OF COMPUTERIZED
ACCOUNTING SYSTEM
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 etc 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.
COMPONENTS OF COMPUTERIZED
ACCOUNTING SYSTEM
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:
a) 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.
Operating system:
Programming software: Special software to accept data and interpret them in
the form of machine/assembly language understandable by a computer.
Utility software: These are designed specifically for managing the computer
device and its resources. Example: File manager, Anti-virus software, etc.
COMPONENTS OF COMPUTERIZED
ACCOUNTING SYSTEM
Software
b) Application software: Programs designed to perform a specific
function for a user. An application software can be classified as follows:
General purpose software: This type of application can be used for a
variety of tasks and not limited to one particular function. Example:
MS-Office.
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.
COMPONENTS OF COMPUTERIZED
ACCOUNTING SYSTEM
People
The most important element of a computer system is its users. They are
also called live-ware of the 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 the system.
System operators: People who operate the system and use it for different
purposes.
COMPONENTS OF COMPUTERIZED
ACCOUNTING SYSTEM
People
The most important element of a computer system is its users. They are
also called live-ware of the 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 the system.
System operators: People who operate the system and use it for different
purposes.
COMPONENTS OF COMPUTERIZED
ACCOUNTING SYSTEM
Procedure
Procedure is a step by step series of instructions to perform a specific
function and achieve desired output. In a computer system there are three
types of procedures.
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.
Internal procedure: It maintains the overall working of each part of a
computer system by directing the flow of information.
Data
The facts and figures that are fed into
a computer for further processing are
called data.
COMPONENTS
OF Data are raw input until the computer
COMPUTERIZE system interprets them using machine
D language, stores them in memory,
ACCOUNTING classifies them for processing and
SYSTEM produces results in conformance with
the instructions given to it.
Processed and useful data are called
information which is used for decision
making.
COMPONENTS OF
COMPUTERIZED
ACCOUNTING SYSTEM
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, etc.
WRAP UP (QUOTE OF THE DAY)
Muhammad Sadam