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Computers in Accounting
Computers in Accounting
Computers in Accounting
Computers in Accounting
Meaning of Computers a
as directed by
electronic device, which is capable of performing
a variety of operations
A COmputer in an
5 Data
6. Connectivity.
1. Hardware
such as keyboard, mouse, monitor, processor etc.
Hardware of computers consists of physical components
These are electronic and electromechanical components.
2. Software
of inst:uctions written in proper
particular problem with the help of conp: ters, sequence
a
In order o solve a
such instructions is called a 'Program' and the
set
language will have to be fed into the computers. A set of
3. People
basically those individuals who use hardware and software to develop, maintain and use the
People are
most inporiant part of the
information system resiaing in the computer memory. They constitute the
of people involved with the computer system
are:
Computer System. The
man categories
(a) System Analysis
b) Operators
(c) Programmers
4. Procedures
in certain order or manner to achieve desired results. These are
Fke Procedure means a series of operations a
of three types:
instructions required for using the software of a computer system
(a) Software-oriented- provides a set of
(b) Hardware -Oriented Provides details about the components and their methods of operations.
(c) Internal Procedure Helps to ensure saooth how of data to computers sequencing the operations of
-
6. Connectivity
The manner in which a particular computer system is connected to others (say through telephone lines,
microwave transmission, satellite link etc) is called element of connectivity.
of
comparison to human beings in performing a task. Most of modern computers perform millions
operations in one second.
2. Computers extremely accurate. Their operations are error -free and as such the
Accuracy are
information obtained from it is highly reliable. But sometimes errors occur due to bad programming or in
accurate data feeding. In computer terminology, it refers is called Garbage in, garbage out (GIGo).
3. Reliability - It rehability refers to the ability with which computer remains functional to serve the user.
Unlike human beings these are immune to tiredness, boredom or fatigue and can perform jobs of
repetitive nature any number of times.
4. Versatility - It refers to the ability of computers to erform a variety of tasks. It can switch over from
one programme to another. The same computer can be used for accounting work, stock control, sales
analysis and even for playing games by the use of different softwares.
5. Storage - Memory or Storage capacity of a computer is so large that it can store any volume of
information or data. Such data can be stored in it on magnetic discs, Floppy discs, punched cards or
microfilms etc. The information stored can be recalled at any time and also correction can be done
within no time.
Limitations
Inspite ofsomany qualities, computers suffer from the following limitations.
1. Lack of Common-sense - Since computer work according to the stored programmes, they simply lack
of common sense.
2. Zero L.Q-Computers are dumb devices with zero Intelligence Quotient (1Q). They can't visualize and
think what exactly to do under a particular situation unless they are
programmed to tackle that situation.
3. Lack of Feeling-Computers lack feelings like human beings because
they are machines. No computer
passes the equivalent of a human heart and soui.
intelligence, wisdom and ability to judge, Computers cannot make decisions of their own.
1. High cost of Training - Besides the high cost of conmputer system, huge money is required to get the
trained specialised staff to ensure efficient and effective use of computerised systems.
2 Danger of System Failure - The danger of system crashing due to hardware failures and the subsequent
resistance from the existing staff because of the fear that they shall be less important to the organisation.
4. Disruption - The accounting process suffer a significant loss of work and time when an organisation
switches over to this system. This is due to the changes in the working environment that requires
accounting staff to adapt to new system and procedures.
Components of computers
The functional components consist of Input Unit, Central Processing Unit (CPU) and the output Unit relation
as follows:
(1) Input Unit: It is for entering the data into the computer system. Keyboard and Mouse are the most
commonly used input devices. Other such devices are magnetic tapes, disc, light pen, optical scanner,
smart card reader etc. Besides there are some devices which respond to voice and physical touch.
(2) Central Processing Unit (CPU); I is the main part of computer hardware that actually processes the
dete according to the instructions it receives. It has three units:
Storage Unit
Secondary
Storage
Control
Unit
(CU)
Arithmatic And
Logical Unit
(ALU) Data Flow
Control Flo
Central Processing
Unit (CPU)
(a) Arithmetic and Logic Unit (ALU): Responsible for performing all the arithmetic calculations such
as addition, subtraction etc. and logical operations involving comparis on among variables.
(b) Memory Unit: For storing the date.
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(C) Control Unit: Responsible for controlling and coordinating the activities of all other units or ne
computer system.
0 Output Unit: After processing the data, the informatiou produced is, required in human readable and
nrstandable form. Output devices perform this function. The commonly used devices are monitor,
printer, graphic plotter (external) and magnetic stage devices (internal). A new device which is capable
of
producing verbal output that sound in human speech is also developed.
Operating Software
peraing Software is a set of
programmes that is used by computers for various purposes. p i a 5
Sortware 1S essential part of computer
system in absence of operating software computer cannot operaic
There are many operating softwares like
Window's, Unix etc.
Utility Software
Oonty Software is set of a
computer programmes used to perform supporting operations in a computer.
Utility Software are highly specialised and designed to perform only a single task or a small range of tasks.
Application Software
Application Software is the set of programmes which is designed and developed for performing certain task
like accounting, word processing etc. for example Tally is the application software.
features:
of accounting data.
1. Online input and storage
sales invoices..
2. Printout of purchase and code.
and transaction is assigned unique
a
3. Every account
from the beginning.
4. Grouping
of accounts is done
5 Tnstant reports for management, for example Stock Statement, Trial Balance, Income Statement
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1PXI1819 Accountancy
Automation of Accounting Process
When accounting functions are done by computerised accounting software that is known as automation of
accounting process under the automation of accounting process human activity is less but accounting
software is more used.
So, accounting functions like posting into ledger, Balancing, Trial Balanceand Final Accounts are prepared
by computer
Stages of Automation
There are different stages of automation as:
) Planning: Under this stage the assessment of size, and business transactions is done for which
automation has to be made.
(i) Selection of Accounting Software: As there are many accounting softwares available in the market. So,
in this stage appropriate accounting software is to be selected accordingto company's need.
Meaning of DBMS: It is a computerized Record keeping system (software) that allows access to data
contained in a database, The DBMS makes possible to share the data in the database among multiple users.
Database Management System is the electronic data processing of information stored in the database. DBMS
is a set of programs that controls and manages creation, utilization and maintenance of database of a
business organization."
Users
Advantages of DBMSs
Limitations of DBMS
1. High setting up costs
2. Lack of Expertise Knowledge
3. Security Problems
4. Hardware& Software costs due to fast obsolescence
Accounting Softwares
(1) Readymade Softwares: Readymade Software are the software that are deyeloped not for any
specific user but for the users in general. Some of the readymade softwares available are Taily, Ex,
Busy. Such softwares are economical and ready to use. Such softwares do not fulfill the requirement of
every user.
1nYI1810 Ao0
Customis ed software modifying the readymade softwares to suit the
means
(2) Customised Software:
softwares are modified according to the need of the
of the user. Readymade
specific requirements
maintenance and training 15 relatively higher than that of readymade user.
business. Cost of installation,
those medium or large business enterprises
in which financial transactions
There packages are used by
are somewhat peculiar in nature.
Software Packages:
Comparison between Customized and Readymade Customised software
Basis Readymade soft ware
Itsaves time as it readymade. Ittakes time for development
Time not to Itis costlier.
Cost It is cost effective as money is
bespent on its development.
Service Is promptly available because Has to depend on the programmer who has
After sales
of well-developed professionals as developed the package specially for the
well as market. needsofthe firm.
It is readily available in the market. It is not readily available as it is tailor made
Ready Availability
to the firm's need.
Class Test: 01
Section- A: One Mark Questions
Class Test
Fill in the blanks with correct word/words
1. Computer is a fast data Pratestingelectronic machine.
2. All the computer operations ale caisedby lectf2icad. pulses and travels at the speed of light.
3 A computer is free from.k.24.0ne%. and lack ofconcentration.
4. Computers are being used as powerful (9mn tools. (Patetrtamag ehaLadlALaeaoringes
5. The mostly used input devices are keyboard, . . . . and scanner.
6. Central Processing Unit is to computer, as the ..kzain... is to human body.
7. The commonly used output devices include M.o.n.i.de. printer etc.
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