NCERT Textbook - Computerised Accounting System | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year PDF Download

 Page 1


480 Accountancy
Computerised Accounting System 13
I
n chapter 12, you have learnt about the need for
use of computers in accounting the nature and
use of accounting information system. In this
chapter, we shall discuss the nature of computrised
accounting system, its advantages, limitations and
sourcing.
13.1 Concept of Computerised
Accounting System
A computerised accounting system is an accounting
information system that processes the financial
transactions and events as per Generally Accepted
Accounting Principles (GAAP) to produce reports as
per user requirements. Every accounting system,
manual or computerised, has two aspects. First, it
has to work under a set of well-defined concepts
called accounting principles. Another, that there is
a user-defined framework for maintenance of
records and generation of reports.
In a computerised accounting system, the framework
of storage and processing of data is called operating
environment that consists of hardware as well as software
in which the accounting system, works. The type of the
accounting system used determines the operating
environment. Both hardware and software are
interdependent. The type of software determines the
structure of the hardware. Further, the selection of
hardware is dependent upon various factors such as
the number of users, level of secrecy and the nature of
various activities of functional departments in an
organisation.
LEARNING OBJECTIVES
After studying this
chapter, you will be able
to :
• define a computerised
accounting system;
• distinguish between a
manual and computer-
ised accounting sys-
tem;
• highlight the advanta-
ges and limitations of
computerised account-
ing system; and
• state the sourcing of a
computerised account-
ing system.
2022-23
Page 2


480 Accountancy
Computerised Accounting System 13
I
n chapter 12, you have learnt about the need for
use of computers in accounting the nature and
use of accounting information system. In this
chapter, we shall discuss the nature of computrised
accounting system, its advantages, limitations and
sourcing.
13.1 Concept of Computerised
Accounting System
A computerised accounting system is an accounting
information system that processes the financial
transactions and events as per Generally Accepted
Accounting Principles (GAAP) to produce reports as
per user requirements. Every accounting system,
manual or computerised, has two aspects. First, it
has to work under a set of well-defined concepts
called accounting principles. Another, that there is
a user-defined framework for maintenance of
records and generation of reports.
In a computerised accounting system, the framework
of storage and processing of data is called operating
environment that consists of hardware as well as software
in which the accounting system, works. The type of the
accounting system used determines the operating
environment. Both hardware and software are
interdependent. The type of software determines the
structure of the hardware. Further, the selection of
hardware is dependent upon various factors such as
the number of users, level of secrecy and the nature of
various activities of functional departments in an
organisation.
LEARNING OBJECTIVES
After studying this
chapter, you will be able
to :
• define a computerised
accounting system;
• distinguish between a
manual and computer-
ised accounting sys-
tem;
• highlight the advanta-
ges and limitations of
computerised account-
ing system; and
• state the sourcing of a
computerised account-
ing system.
2022-23
481 Computerised Accounting System
Take the case of a club, for example, where the number of transactions and
their variety is relatively small, a Personal Computer with standardised software
may be sufficient. However, for a large business organisation with a number of
geographically scattered factories and offices, more powerful computer systems
supported by sophisticated networks are required to handle the voluminous
data and the complex reporting requirements. In order to handle such
requirements, multi-user operating systems such as UNIX, Linux, etc. are used.
Modern computerised accounting systems are based on the concept of
database. A database is implemented using a database management system,
which is define by a set of computer programmes (or software) that manage
and organise data effectively and provide access to the stored data by the
application programmes. The accounting database is well-organised with active
interface that uses accounting application programs and reporting system.
Every computerised accounting system has two basic requirements;
• Accounting Framework  : It consists a set of principles, coding and grouping
structure of accounting.
• Operating Procedure : It is a well-defined operating procedure blended
suitably with the operating environment of the organisation.
The use of computers in any database oriented application has four basic
requirements as mentioned below ;
• Front-end Interface : It is an interactive link or a dialog between the user
and database-oriented software through which the user communicates to
the back-end database. For example, a transaction relating to purchase
of goods may be dealt with the accounting system through a purchase
voucher, which appears on the computer’s monitor of data entry operator
and when entered into the system is stored in the database. The same
data may be queried through reporting system say purchase analysis
software programme.
• Back-end Database : It is the data storage system that is hidden from the
user and responds to the requirement of the user to the extent the user is
authorised to access.
• Data Processing : It is a sequence of actions that are taken to transform
the data into decision useful information.
• Reporting System: It is an integrated set of objects that constitute the
report.
The computerised accounting is also one of the database-oriented
applications wherein the transaction data is stored in well-organised database.
The user operates on such database using the required and desired interface
and also takes the desired reports by suitable transformations of stored data
into information. Therefore, the fundamentals of computerised accounting
embrace all the basic requirements of any database-oriented application in
2022-23
Page 3


480 Accountancy
Computerised Accounting System 13
I
n chapter 12, you have learnt about the need for
use of computers in accounting the nature and
use of accounting information system. In this
chapter, we shall discuss the nature of computrised
accounting system, its advantages, limitations and
sourcing.
13.1 Concept of Computerised
Accounting System
A computerised accounting system is an accounting
information system that processes the financial
transactions and events as per Generally Accepted
Accounting Principles (GAAP) to produce reports as
per user requirements. Every accounting system,
manual or computerised, has two aspects. First, it
has to work under a set of well-defined concepts
called accounting principles. Another, that there is
a user-defined framework for maintenance of
records and generation of reports.
In a computerised accounting system, the framework
of storage and processing of data is called operating
environment that consists of hardware as well as software
in which the accounting system, works. The type of the
accounting system used determines the operating
environment. Both hardware and software are
interdependent. The type of software determines the
structure of the hardware. Further, the selection of
hardware is dependent upon various factors such as
the number of users, level of secrecy and the nature of
various activities of functional departments in an
organisation.
LEARNING OBJECTIVES
After studying this
chapter, you will be able
to :
• define a computerised
accounting system;
• distinguish between a
manual and computer-
ised accounting sys-
tem;
• highlight the advanta-
ges and limitations of
computerised account-
ing system; and
• state the sourcing of a
computerised account-
ing system.
2022-23
481 Computerised Accounting System
Take the case of a club, for example, where the number of transactions and
their variety is relatively small, a Personal Computer with standardised software
may be sufficient. However, for a large business organisation with a number of
geographically scattered factories and offices, more powerful computer systems
supported by sophisticated networks are required to handle the voluminous
data and the complex reporting requirements. In order to handle such
requirements, multi-user operating systems such as UNIX, Linux, etc. are used.
Modern computerised accounting systems are based on the concept of
database. A database is implemented using a database management system,
which is define by a set of computer programmes (or software) that manage
and organise data effectively and provide access to the stored data by the
application programmes. The accounting database is well-organised with active
interface that uses accounting application programs and reporting system.
Every computerised accounting system has two basic requirements;
• Accounting Framework  : It consists a set of principles, coding and grouping
structure of accounting.
• Operating Procedure : It is a well-defined operating procedure blended
suitably with the operating environment of the organisation.
The use of computers in any database oriented application has four basic
requirements as mentioned below ;
• Front-end Interface : It is an interactive link or a dialog between the user
and database-oriented software through which the user communicates to
the back-end database. For example, a transaction relating to purchase
of goods may be dealt with the accounting system through a purchase
voucher, which appears on the computer’s monitor of data entry operator
and when entered into the system is stored in the database. The same
data may be queried through reporting system say purchase analysis
software programme.
• Back-end Database : It is the data storage system that is hidden from the
user and responds to the requirement of the user to the extent the user is
authorised to access.
• Data Processing : It is a sequence of actions that are taken to transform
the data into decision useful information.
• Reporting System: It is an integrated set of objects that constitute the
report.
The computerised accounting is also one of the database-oriented
applications wherein the transaction data is stored in well-organised database.
The user operates on such database using the required and desired interface
and also takes the desired reports by suitable transformations of stored data
into information. Therefore, the fundamentals of computerised accounting
embrace all the basic requirements of any database-oriented application in
2022-23
482 Accountancy
computers. Accordingly, the computerised accounting system has the above
four additional requirements.
13.2 Comparison between Manual and Computerised Accounting
Accounting, by definition, is the process of identifying, recording, classifying
and summarising financial transactions to produce the financial reports for
their ultimate analysis. Let us understand these activities in the context of
manual and computerised accounting system.
• Identifying : The identification of transactions, based on application of
accounting principles is, common to both manual and computerised
accounting system.
• Recording : The recording of financial transactions, in manual accounting
system is through books of original entries while the data content of such
transactions is stored in a well-designed accounting database in
computerised accounting system.
• Classification : In a manual accounting system, transactions recorded in
the books of original entry are further classified by posting into ledger
accounts. This results in transaction data duplicity.  In computerised
accounting, no such data duplication is made to cause classification of
transactions. In order to produce ledger accounts, the stored transaction
data is processed to appear as classified so that the same is presented in
the form of a report. Different forms of the same transaction data are
made available for being presented in various reports.
• Summarising : The transactions are summarised to produce trial balance
in manual accounting system by ascertaining the balances of various
accounts. As a result, preparation of ledger accounts becomes a pre-
requisite for preparing the trial balance. However, in computerised
accounting, the originally stored transactions data are processed to churn
out the list of balances of various accounts to be finally shown in the trial
balance report. The generation of ledger accounts is not a necessary
condition for producing trial balance in a computerised accounting system.
• Adjusting Entries : In a manual accounting system, these entries are made
to adhere to the principle of cost matching revenue. These entries are
recorded to match the expenses of the accounting period with the revenues
generated by them. Some other adjusting entries may be made as part of
errors and rectification. However, in computerised accounting, Journal
vouchers are prepared and stored to follow the principle of cost matching
revenue, but there is nothing like passing adjusting entries for errors and
rectification, except for rectifying an error of principle by having recorded
a wrong voucher such as using payment voucher for a receipt transaction.
• Financial Statements : In a manual system of accounting, the preparation
2022-23
Page 4


480 Accountancy
Computerised Accounting System 13
I
n chapter 12, you have learnt about the need for
use of computers in accounting the nature and
use of accounting information system. In this
chapter, we shall discuss the nature of computrised
accounting system, its advantages, limitations and
sourcing.
13.1 Concept of Computerised
Accounting System
A computerised accounting system is an accounting
information system that processes the financial
transactions and events as per Generally Accepted
Accounting Principles (GAAP) to produce reports as
per user requirements. Every accounting system,
manual or computerised, has two aspects. First, it
has to work under a set of well-defined concepts
called accounting principles. Another, that there is
a user-defined framework for maintenance of
records and generation of reports.
In a computerised accounting system, the framework
of storage and processing of data is called operating
environment that consists of hardware as well as software
in which the accounting system, works. The type of the
accounting system used determines the operating
environment. Both hardware and software are
interdependent. The type of software determines the
structure of the hardware. Further, the selection of
hardware is dependent upon various factors such as
the number of users, level of secrecy and the nature of
various activities of functional departments in an
organisation.
LEARNING OBJECTIVES
After studying this
chapter, you will be able
to :
• define a computerised
accounting system;
• distinguish between a
manual and computer-
ised accounting sys-
tem;
• highlight the advanta-
ges and limitations of
computerised account-
ing system; and
• state the sourcing of a
computerised account-
ing system.
2022-23
481 Computerised Accounting System
Take the case of a club, for example, where the number of transactions and
their variety is relatively small, a Personal Computer with standardised software
may be sufficient. However, for a large business organisation with a number of
geographically scattered factories and offices, more powerful computer systems
supported by sophisticated networks are required to handle the voluminous
data and the complex reporting requirements. In order to handle such
requirements, multi-user operating systems such as UNIX, Linux, etc. are used.
Modern computerised accounting systems are based on the concept of
database. A database is implemented using a database management system,
which is define by a set of computer programmes (or software) that manage
and organise data effectively and provide access to the stored data by the
application programmes. The accounting database is well-organised with active
interface that uses accounting application programs and reporting system.
Every computerised accounting system has two basic requirements;
• Accounting Framework  : It consists a set of principles, coding and grouping
structure of accounting.
• Operating Procedure : It is a well-defined operating procedure blended
suitably with the operating environment of the organisation.
The use of computers in any database oriented application has four basic
requirements as mentioned below ;
• Front-end Interface : It is an interactive link or a dialog between the user
and database-oriented software through which the user communicates to
the back-end database. For example, a transaction relating to purchase
of goods may be dealt with the accounting system through a purchase
voucher, which appears on the computer’s monitor of data entry operator
and when entered into the system is stored in the database. The same
data may be queried through reporting system say purchase analysis
software programme.
• Back-end Database : It is the data storage system that is hidden from the
user and responds to the requirement of the user to the extent the user is
authorised to access.
• Data Processing : It is a sequence of actions that are taken to transform
the data into decision useful information.
• Reporting System: It is an integrated set of objects that constitute the
report.
The computerised accounting is also one of the database-oriented
applications wherein the transaction data is stored in well-organised database.
The user operates on such database using the required and desired interface
and also takes the desired reports by suitable transformations of stored data
into information. Therefore, the fundamentals of computerised accounting
embrace all the basic requirements of any database-oriented application in
2022-23
482 Accountancy
computers. Accordingly, the computerised accounting system has the above
four additional requirements.
13.2 Comparison between Manual and Computerised Accounting
Accounting, by definition, is the process of identifying, recording, classifying
and summarising financial transactions to produce the financial reports for
their ultimate analysis. Let us understand these activities in the context of
manual and computerised accounting system.
• Identifying : The identification of transactions, based on application of
accounting principles is, common to both manual and computerised
accounting system.
• Recording : The recording of financial transactions, in manual accounting
system is through books of original entries while the data content of such
transactions is stored in a well-designed accounting database in
computerised accounting system.
• Classification : In a manual accounting system, transactions recorded in
the books of original entry are further classified by posting into ledger
accounts. This results in transaction data duplicity.  In computerised
accounting, no such data duplication is made to cause classification of
transactions. In order to produce ledger accounts, the stored transaction
data is processed to appear as classified so that the same is presented in
the form of a report. Different forms of the same transaction data are
made available for being presented in various reports.
• Summarising : The transactions are summarised to produce trial balance
in manual accounting system by ascertaining the balances of various
accounts. As a result, preparation of ledger accounts becomes a pre-
requisite for preparing the trial balance. However, in computerised
accounting, the originally stored transactions data are processed to churn
out the list of balances of various accounts to be finally shown in the trial
balance report. The generation of ledger accounts is not a necessary
condition for producing trial balance in a computerised accounting system.
• Adjusting Entries : In a manual accounting system, these entries are made
to adhere to the principle of cost matching revenue. These entries are
recorded to match the expenses of the accounting period with the revenues
generated by them. Some other adjusting entries may be made as part of
errors and rectification. However, in computerised accounting, Journal
vouchers are prepared and stored to follow the principle of cost matching
revenue, but there is nothing like passing adjusting entries for errors and
rectification, except for rectifying an error of principle by having recorded
a wrong voucher such as using payment voucher for a receipt transaction.
• Financial Statements : In a manual system of accounting, the preparation
2022-23
483 Computerised Accounting System
of financial statements pre-supposes the availability of trial balance. However,
in computerised accounting, there is no such requirement. The generation
of financial statements is independent of producing the trial balance because
such statements can be prepared by direct processing of originally stored
transaction data.
• Closing the Books : After the preparation of financial reports, the accountants make
preparations for the next accounting period. This is achieved by posting of
closing and reversing journal entries. In computerised accounting, there is
year-end processing to create and store opening balances of accounts in
database.
It may be observed that conceptually, the accounting process is identical
regardless of the technology used.
13.3 Advantages of Computerised Accounting System
Computerised accounting offers several advantages vis-a-vis manual accounting,
these are summarised as follows ;
• Speed : Accounting data is processed faster by using a computerised
accounting system than it is achieved through manual efforts. This is because
computers require far less time than human beings in performing a task.
• Accuracy : The possibility of error is eliminated in a computerised
accounting system because the primary accounting data is entered once
for all the subsequent usage and processes in preparing the accounting
reports. Normally, accounting errors in a manual accounting system occur
because of repeated posting of same set of original data by several times
while preparing different types of accounting reports.
• Reliability : The computer system is well-adapted to performing repetitive
operations. They are immune to tiredness, boredom or fatigue. As a result,
computers are highly reliable compared to human beings. Since computerised
accounting system relies heavily on computers, they are relatively more reliable
than manual accounting systems.
• Up-to-Date Information : The accounting records, in a computerised
accounting system are updated automatically as and when accounting
data is entered and stored. Therefore, latest information pertaining to
accounts get reflected when accounting reports are produced and printed.
For example, when accounting data pertaining to a transaction
regarding cash purchase of goods is entered and stored, the cash account,
purchase account and also the financial statements (trading and profit and
loss account) reflect the impact immediately.
• Real Time User Interface : Most of the automated accounting systems are
2022-23
Page 5


480 Accountancy
Computerised Accounting System 13
I
n chapter 12, you have learnt about the need for
use of computers in accounting the nature and
use of accounting information system. In this
chapter, we shall discuss the nature of computrised
accounting system, its advantages, limitations and
sourcing.
13.1 Concept of Computerised
Accounting System
A computerised accounting system is an accounting
information system that processes the financial
transactions and events as per Generally Accepted
Accounting Principles (GAAP) to produce reports as
per user requirements. Every accounting system,
manual or computerised, has two aspects. First, it
has to work under a set of well-defined concepts
called accounting principles. Another, that there is
a user-defined framework for maintenance of
records and generation of reports.
In a computerised accounting system, the framework
of storage and processing of data is called operating
environment that consists of hardware as well as software
in which the accounting system, works. The type of the
accounting system used determines the operating
environment. Both hardware and software are
interdependent. The type of software determines the
structure of the hardware. Further, the selection of
hardware is dependent upon various factors such as
the number of users, level of secrecy and the nature of
various activities of functional departments in an
organisation.
LEARNING OBJECTIVES
After studying this
chapter, you will be able
to :
• define a computerised
accounting system;
• distinguish between a
manual and computer-
ised accounting sys-
tem;
• highlight the advanta-
ges and limitations of
computerised account-
ing system; and
• state the sourcing of a
computerised account-
ing system.
2022-23
481 Computerised Accounting System
Take the case of a club, for example, where the number of transactions and
their variety is relatively small, a Personal Computer with standardised software
may be sufficient. However, for a large business organisation with a number of
geographically scattered factories and offices, more powerful computer systems
supported by sophisticated networks are required to handle the voluminous
data and the complex reporting requirements. In order to handle such
requirements, multi-user operating systems such as UNIX, Linux, etc. are used.
Modern computerised accounting systems are based on the concept of
database. A database is implemented using a database management system,
which is define by a set of computer programmes (or software) that manage
and organise data effectively and provide access to the stored data by the
application programmes. The accounting database is well-organised with active
interface that uses accounting application programs and reporting system.
Every computerised accounting system has two basic requirements;
• Accounting Framework  : It consists a set of principles, coding and grouping
structure of accounting.
• Operating Procedure : It is a well-defined operating procedure blended
suitably with the operating environment of the organisation.
The use of computers in any database oriented application has four basic
requirements as mentioned below ;
• Front-end Interface : It is an interactive link or a dialog between the user
and database-oriented software through which the user communicates to
the back-end database. For example, a transaction relating to purchase
of goods may be dealt with the accounting system through a purchase
voucher, which appears on the computer’s monitor of data entry operator
and when entered into the system is stored in the database. The same
data may be queried through reporting system say purchase analysis
software programme.
• Back-end Database : It is the data storage system that is hidden from the
user and responds to the requirement of the user to the extent the user is
authorised to access.
• Data Processing : It is a sequence of actions that are taken to transform
the data into decision useful information.
• Reporting System: It is an integrated set of objects that constitute the
report.
The computerised accounting is also one of the database-oriented
applications wherein the transaction data is stored in well-organised database.
The user operates on such database using the required and desired interface
and also takes the desired reports by suitable transformations of stored data
into information. Therefore, the fundamentals of computerised accounting
embrace all the basic requirements of any database-oriented application in
2022-23
482 Accountancy
computers. Accordingly, the computerised accounting system has the above
four additional requirements.
13.2 Comparison between Manual and Computerised Accounting
Accounting, by definition, is the process of identifying, recording, classifying
and summarising financial transactions to produce the financial reports for
their ultimate analysis. Let us understand these activities in the context of
manual and computerised accounting system.
• Identifying : The identification of transactions, based on application of
accounting principles is, common to both manual and computerised
accounting system.
• Recording : The recording of financial transactions, in manual accounting
system is through books of original entries while the data content of such
transactions is stored in a well-designed accounting database in
computerised accounting system.
• Classification : In a manual accounting system, transactions recorded in
the books of original entry are further classified by posting into ledger
accounts. This results in transaction data duplicity.  In computerised
accounting, no such data duplication is made to cause classification of
transactions. In order to produce ledger accounts, the stored transaction
data is processed to appear as classified so that the same is presented in
the form of a report. Different forms of the same transaction data are
made available for being presented in various reports.
• Summarising : The transactions are summarised to produce trial balance
in manual accounting system by ascertaining the balances of various
accounts. As a result, preparation of ledger accounts becomes a pre-
requisite for preparing the trial balance. However, in computerised
accounting, the originally stored transactions data are processed to churn
out the list of balances of various accounts to be finally shown in the trial
balance report. The generation of ledger accounts is not a necessary
condition for producing trial balance in a computerised accounting system.
• Adjusting Entries : In a manual accounting system, these entries are made
to adhere to the principle of cost matching revenue. These entries are
recorded to match the expenses of the accounting period with the revenues
generated by them. Some other adjusting entries may be made as part of
errors and rectification. However, in computerised accounting, Journal
vouchers are prepared and stored to follow the principle of cost matching
revenue, but there is nothing like passing adjusting entries for errors and
rectification, except for rectifying an error of principle by having recorded
a wrong voucher such as using payment voucher for a receipt transaction.
• Financial Statements : In a manual system of accounting, the preparation
2022-23
483 Computerised Accounting System
of financial statements pre-supposes the availability of trial balance. However,
in computerised accounting, there is no such requirement. The generation
of financial statements is independent of producing the trial balance because
such statements can be prepared by direct processing of originally stored
transaction data.
• Closing the Books : After the preparation of financial reports, the accountants make
preparations for the next accounting period. This is achieved by posting of
closing and reversing journal entries. In computerised accounting, there is
year-end processing to create and store opening balances of accounts in
database.
It may be observed that conceptually, the accounting process is identical
regardless of the technology used.
13.3 Advantages of Computerised Accounting System
Computerised accounting offers several advantages vis-a-vis manual accounting,
these are summarised as follows ;
• Speed : Accounting data is processed faster by using a computerised
accounting system than it is achieved through manual efforts. This is because
computers require far less time than human beings in performing a task.
• Accuracy : The possibility of error is eliminated in a computerised
accounting system because the primary accounting data is entered once
for all the subsequent usage and processes in preparing the accounting
reports. Normally, accounting errors in a manual accounting system occur
because of repeated posting of same set of original data by several times
while preparing different types of accounting reports.
• Reliability : The computer system is well-adapted to performing repetitive
operations. They are immune to tiredness, boredom or fatigue. As a result,
computers are highly reliable compared to human beings. Since computerised
accounting system relies heavily on computers, they are relatively more reliable
than manual accounting systems.
• Up-to-Date Information : The accounting records, in a computerised
accounting system are updated automatically as and when accounting
data is entered and stored. Therefore, latest information pertaining to
accounts get reflected when accounting reports are produced and printed.
For example, when accounting data pertaining to a transaction
regarding cash purchase of goods is entered and stored, the cash account,
purchase account and also the financial statements (trading and profit and
loss account) reflect the impact immediately.
• Real Time User Interface : Most of the automated accounting systems are
2022-23
484 Accountancy
inter-linked through a network of computers. This facilitates the availability
of information to various users at the same time on a real time basis (that
is spontaneously).
• Automated Document Production : Most of the computerised accounting
systems have standardised, user defined format of accounting reports that
are generated automatically. The accounting reports such as Cash book,
Trial balance, Statement of accounts are obtained just by click of a mouse
in a computerised accounting environment.
• Scalability : In a computerised accounting system, the requirement of
additional manpower is confined to data entry operators for storing
additional vouchers. The additional cost of processing additional transactions
is almost negligible. As a result the computerised accounting systems are
highly scalable.
• 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.
• Efficiency : The computer based accounting systems ensure better use of
resources and time. This brings about efficiency in generating decisions,
useful informations and reports.
• 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.
• MIS Reports : The computerised accounting system facilitates the real time
production of management information reports, which will help
management to monitor and control the business effectively. Debtors’
analysis would indicate the possibilities of defaults (or bad debts) and also
concentration of debt and its impact on the balance sheet. For example, if
the company has a policy of restricting the credit sales by a fixed amount
to a given party, the information is available on the computer system
immediately when every voucher is entered through the data entry form.
However, it takes time when it comes to a manual accounting system.
Besides, the results may not be accurate.
• Storage and Retrieval : The computerised accounting system allows the
users to store data in a manner that does not require a large amount of
physical space. This is because the accounting data is stored in
hard-disks, CD-ROMs, floppies that occupy a fraction of physical space
compared to books of accounts in the form of ledger, journal and other
accounting registers. Besides, the system permits fast and accurate
retrieval of data and information.
• Motivation and Employees Interest : The computer system requires a
2022-23