Evolution and Features of Computerised Accounting Video Lecture | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

computerized accounting and its features
evolution of computerized accounting
manual system of accounting has been
traditionally the most popular method of
keeping the records of financial
transactions of an organization but with
time the technological innovations led
to the development of various machines
capable of performing a variety of
accounting functions these machines
combined the features of a typewriter
and various kinds of calculators with
substantial increase in the number of
transactions the technology advanced
further the maintenance of accounting
data on a real-time basis or spontaneous
basis became almost essential such a
system of maintaining accounting records
became convenient with a computerized
accounting system transaction processing
system transaction processing system or
TPS are among the earliest computerized
systems catering to the requirements of
large business enterprises the purpose
of a typical TPS is to record process
validate and store transactions that
occur in the various functional areas of
a business for subsequent retrieval and
usage
a transaction could be internal or
external when a department requisitions
material supplies from stores an
internal transaction is said to have
occurred however when the purchase
department purchases materials from a
supplier an external transaction takes
place the scope of financial accounting
is confined to external transactions
only let us consider a case wherein a
customer withdraws money using the
automated teller machine or ATM facility
to understand the steps involved in
processing a transaction through TPS as
shown here one data entry to data
validation
three processing and revalidation for
storage five information six reporting a
simple computerized accounting system
accepts the complete transaction data as
input store such data in computer
storage media say hard disk and
retrieves the accounting data for
processing as and when required for
generating an accounting report as
output the input process output diagram
shown below indicates as to how
accounting software translates data into
information this processing of data is
accomplished either through batch
processing or real-time processing
features of computerized accounting
system typically a computerized
accounting system comprises of the
following features management
information system and accounting
information system a management
information system or Mis is a system
that provides the information necessary
to take decisions and manage an
organization effectively accounting
information system or AIS identifies
collects processes and communicates
economic information about an entity to
a wide variety of users every accounting
system is essentially a part of the
accounting information system or AIS
which in turn is a part of the broader
system namely the organization's
management information system the
accounting information system or AIS
receives and provides information to the
various subsystems of the institutional
or integrated Mis
the following diagram shows the
relationship of the accounting system
with the other functional management
information systems the reports
generated by the accounting system are
disseminated to the various users
internal and external to the
organization the external parties
include the proprietors investors
creditors finances government suppliers
and vendors and the society at large
the reports used by these parties are
more of routine nature however the
internal parties the employees managers
etc use the accounting information for
decision-making and control designing of
accounting reports data when processed
becomes information when the related
information is summarized to meet a
particular need it is called as a report
a report must be effective and efficient
to the user and should substantiate the
decision making process akin to any
report every accounting report must be
able to fulfill the following criterion
a relevance be timeliness C accuracy
completeness II summarization the
accounting related Mis reports maybe of
following reports a summary reports B
demand reports C customer or supplier
reports D exception reports e
responsibility reports the various steps
involved in designing accounting reports
from accounting data are as follows one
definition of objectives - structure of
the report 3 wearing with the database
for finalizing the report data interface
between the information system the
following examples illustrate the
relationship and data interface between
the various sub components of M is one
accounting information system
manufacturing information system and
human resource information system - a is
and marketing information system 3 a is
and manufacturing information system
one accounting information system
manufacturing information system and
human resource information system the
diagram here depicts the relationship
between the three information systems
namely manufacturing information system
accounting information system and the
human resource information system the
manufacturing department receives the
list of workers from the human resource
department or HR department it sends the
details of production achieved by the
workers on the basis of which the HR
department to the finance and Accounts
Department to pay the wages the details
of the wages paid and statutory dues are
also sent by the F and a department to
the production department also to the HR
department to monitor the performance of
workers the HR department communicates
to the other departments about the good
or bad performance
to a is and marketing information system
consider the business process in the
marketing and sales department involving
the following activities inquiry contact
creation entry of orders dispatch of
goods billing to customers the
accounting subsystems transaction cycle
includes the processing of sales orders
credit authorization custody of the
goods inventory position shipping
information receivables etc it also
keeps a track of the customer accounts
example aging report which should be
generated by the system 3 AIS and
manufacturing information system
similarly business process in the
production department may involve the
following activities preparation of
plans and schedules issue of material
requisition forms and job cards issue of
inventory issue of orders for
procurement of raw materials handling of
vendors invoices payments to vendors
the accounting subsystem transaction
cycle would therefore include the
processing of purchase orders advanced
to suppliers or vendors inventory status
updating account payable etc all of this
information has to share with the other
Mis in the organization
hence the computerized accounting system
as a sub component of the accounting
information system transforms the
financial data into meaningful
information and communicates the
information to the decision-makers the
report demanded may be routine or
specific ones to summarize as explained
earlier transaction processing systems
or TPS have started playing a vital role
in business operations and computerized
accounting assists management in taking
timely efficient decisions
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