Unit 17: Use of Computer in Accounting (Notes)

 Computer System: 

A computer is an electronic device that can carry out a wide range of tasks when given a set of instructions. A computer program is a collection of instructions. In the recording of financial transactions, the computer plays a significant role. In today's world, most businesses record financial data by using a computer system rather than a manual role.

Features of the computer system: 

I. Speed 

II. Accuracy 

III. Memory 

IV. Versatility 

V. Reliability 

Elements of Computer System: 

I. Hardware 

II. Software 

III. People

 IV. Procedures 

V. Data 

VI. Connectivity

importance/Advantages of Computer System: 

I. High-speed 

II. Reliability

 III. Accuracy

 IV. Storage 

Limitation of Computer System: 

I. Lack of common sense 

II. Lack of own intelligence

 III. High cost of installation 

IV. Cost of training

Process of the Computer system: 

I. Input 

II. Storage

 III. Process 

IV. Output

Accounting Software: 

Accounting software is a fundamental application that allows an organization to manage business financial transactions with the use of computers. It is computer software used by professionals to carry out the function of recording, arranging, and summarizing the financial data of the business. It is used to process financial transactions like journals, ledgers, income and expenses, trial balances, balance sheets, accounts receivable and payable, invoicing, cash flow analysis, and so on. It enables the efficient and fast processing of financial transactions. It reduces accounting errors. For example TALLEY, SWASTIK, FINPRO, etc. 

Features of Accounting software: 

I. It leads to quick preparation of accounts and makes available the accounting statements and records on time. 

II. It involves less clerical work and is very neat and more accurate.

 III. It adapts to the current and future needs of the business. 

IV. It ensures control over accounting work and records. 

V. Flexibility in maintaining accounts is possible. 

VI. Errors and mistakes would be at a minimum in computerized accounting. 

Importance/ Advantages of Accounting Software: 

1. Accuracy in accounting. 

2. Cost savings 

3. Increase in speed 

4. Cost reduction 

5. Accuracy in forecasting 

6. Security 

Need/Use of Accounting Software: 

1. For financial control 

2. For increase in efficiency 

3. For the security of financial data 

4. For cost reduction 

5. For time savings 

6. For preparing reports

Language processor of software system: 

1. Compiler 

2. Assembler 

3. Interpreter