Sky Tycoons - computerised accounting - 52 Neha (A), 112 Ravinder Singh (B), 179 Suraj Sharma (C)

Computerized accounting

INTRODUCTION-: 112 Ravinder singh (B)

Computerised accounting , a merger of accounting systems with the power of computers . it can be simply defined as :

COMPUTERS + ACCOUNTING

That means , replacing the manual system of maintaining the books of accounts with the use of software package for accounting on computers is called computerized accounting. But it is important to understand that computer is only a tool that is used to do the accontant’s job . computer is instructed through software to do routine book – keeping and to perform complex calculations . it can be explained as a process function .

INPUT - DATA AND INSTRUCTIONS

PROCESSING – COMPUTER

OUTPUT – INFORMATION

Discussion – 52 Neha (A)

· ADVANTAGES OF COMPUTERIZED ACCOUNTING

• Speed – data entry onto the computer with its formatted screens and built-in databases of customers and supplier details and stock records can be carried out far more quickly than any manual processing.

• Automatic document production – fast and accurate invoices, credit notes, purchase orders, printing statements and payroll documents are all done automatically.

• Accuracy – there is less room for errors as only one accounting entry is needed for each transaction rather than two (or three) for a manual system.

• Up-to-date information – the accounting records are automatically updated and so account balances (e.g. customer accounts) will always be up-to-date.

• Availability of information – the data is instantly available and can be made available to different users in different locations at the same time.

• Management information – reports can be produced which will help management monitor and control the business, for example the aged debtors analysis will show which customer accounts are overdue, trial balance, trading and profit and loss account and balance sheet.

· DISADVANTAGES OF COMPUTERIZED ACCOUNTING

While computerized accounting systems help many firms in processing their financial tasks, they are not always right and effective -- they have limitations. A misconception exists that once accounting is done in a computer, all is well and no problems exist in this area anymore. This couldn't be farther from the truth -- a computer is only a tool to process information and errors can and do occur quite often.

1. Human Errors

· The old saying, "trash in, trash out" applies to computerized accounting systems. Human errors can occur at all levels within a system, from programming to user errors. A system could be set up incorrectly, with an account reporting in the wrong report. A user could also enter erroneous numbers or employ wrong accounts. Because of human errors, a new system implementation should undergo rigorous testing before it goes live, and comprehensive training should be provided to users to minimize errors.

Costs

· Accounting systems costs have decreased substantially, but they still can be costly, not only to purchase, but to maintain them as well. Extra costs for training new employees in the system should be considered along with ongoing customer service. Charges for customizing reports and other processes can pose limitations on small and medium-sized businesses that cannot afford these services. Other program costs to consider include new version upgrades and even hardware that may be required as technology progresses. If businesses can't afford these costs, they will be left behind.

Security

· System security concerns can pose limitations on accounting software. Besides worrying about viruses and worms, small-business owners also should be concerned with unauthorized access of computerized accounting data. IDs and passwords are common minimum security measures businesses can use to protect the accounting software against intrusion, but they may not be enough. According to Kiplinger magazine, hacking is very common with small businesses; however, only one in five small firms owns antiviral software and over half don't use encryption on wireless connections.

· CONCLUSION – 179 Suraj Sharma (C)

The accounting software is generally tailored in large business organisations with multi users and geographically scattered locations. These software requires specialised training to the users. The tailored software is designed to meet the specific requirements of the users and form an important part of the organisational MIS. The secrecy and authenticity checks are robust in such softwares and they

offer high flexibility in terms of number of users.