Assignment on

Computerized Accounting System

Course Title: Intermediate Financial Accounting

Course Code: ACT-202

Submitted To:
Repon Miah

Senior Lecturer in Accounting, Department of Business Administration

Faculty of Business & Entrepreneurship

Submitted By:
Sakib Mahmud Seezan
ID- 221-11-1523
Section- 61 (D)
Department of Business Administration

Date of Submission: 10 June, 2023

 Computerized Accounting System

Table of Contents

1.Introduction..........................................................................................................................................

2. Main body...........................................................................................................................................

(a) Computerized accounting system assistance towards business................................................

i. Positive impacts that computerized accounting system brings to the business..........................

ii. Accountants benefit from the engagement of a computerized accounting system....................

(b) Controls that are being used in the accounting system and their benefits................................

(c) Main contributions of the payroll system and the pros and cons of the inventory and billing

system………………………………………………………………………………………………………………………………………………..…

3.Conclusion...............................................................................................................................................

References.................................................................................................................................................
1.Introduction
The assigment is on a computerized accounting system and its importance in a
contemporary business organization. In the ever-changing business world, where the
competition is rising exponentially, the entire organizations are trying to use more
efficient functional processes to achieve sustainable competitive advantages. The
computerized accounting system supports obtaining an automated accounting system.
This system is very fast and rate of accuracy measured is much higher in comparison to
the manual system of accounting. This system is consisting of positive impacts on the
business organization as it helps in delivering fast as well as accurate financial
information to the management. The accountants are also benefitted from the
computerized accounting system. Some controlling measures are used in this system of
accounting is to manage the system efficiently so that maximum outcomes can be
obtained from it. The enhancement of this system is leading to the development of
efficiency in the payroll system and has significant impacts on billing and inventory
system[ CITATION top18 \l 16393 ].

2. Main body

(a) Computerized accounting system assistance towards business

i. Positive impacts that computerized accounting system brings to the business

The computerized system of accounting has a substantial level of positive impacts on
the business organization. It has significant advantages as it helps in providing fast
accounting services, unlike the manual accounting system. Besides this, it is almost
error-free so it helps in obtaining more genuine accounting information in comparison to
the manual system of accounting. Many accounting professionals complain that manual
system of accounting is often monotonous and boring as they have to perform long
calculations. In the case of the computerized system of accounting, there is no such
type of complaint. Most of all, the accountants need not be expert as most of the
procedures are already programmed with the system. Hence, with little accounting
knowledge, an individual can manage the accounting tasks with the help of this
system[ CITATION Jac18 \l 1033 ]. In this context, the business owners and top
management staff, who have not adequate accounting knowledge, can also check the
accounts easily with computerized system. The management can obtain the necessary
accounting
and financial information more easily with a computerized accounting system. Hence,
management decision-making processes are stimulated and become more efficient.

The computerized accounting system not just helps in obtaining accounting information
quickly but it also supports getting the complex report to reinforce management
decisions. The business documents like purchase orders, invoices, salary slips, etc. can
be produced more rapidly with computerized system. Apart from this, several
accounting reports are updated automatically as well as available instantly with the help
of this system. As the computerized system helps the management in getting necessary
accounting and financial information more quickly, hence it supports in making better
management decisions. In these ways, this system has brought important optimistic
impacts on business organization[ CITATION Mou15 \l 1033 ].

ii. Accountants benefit from the engagement of a computerized accounting

system
The accountants are significantly benefitted by the engagement of a computerized
system of accounting. The system supports accountants to store as well as access the
financial data more quickly and efficiently. The accountants can make the necessary
changes very quickly to provide essential financial reports to the management. It
alleviates the requirement of keeping the paper files, which are often terrifying to the
accountants. The computer has huge storage capacity and the information on the
computer can be gathered instantly. It also supports the accountants to get the
necessary financial and accounting information more quickly. As the computerized
accounting system is very fast, thus it saves the time of the accountants, hence they get
adequate leisure time. The business transactions can be entered into the system
quickly. Moreover, the computer system uses to post the transactions accordingly. The
bookkeepers or accountants can be able to process more accounting information as
quickly as possible by using the formulas as well as can verify the computed totals and
hence it leads to minimizing errors[ CITATIONMor18 \l 1033 ].

The computerized accounting systems are generally customized by the specific industry
and thus allow the bookkeepers and accountants to use the existing templates for the
general ledger entry. It supports the business organization in staying organized. While
the accounting or financial information is entered into the computer system it supports
obtaining the information more easily. It supports the accountants to store huge
accounting information within the system and they can be accessed very quickly at the
time of requirements, unlike paper files. The reporting is becoming easier by the uses of
this system so that accountants can deliver the necessary reports promptly to the
management.

(b) Controls that are being used in the accounting system and their benefits
For the control of the accounting system, an internal control system is being attributed
that monitors, measures and directs the resources of the organization in regards to
accounting and auditing. The five most important components of this internal control
system in account maintenance are risk assessment, communication and information
gathering, monitoring and controlling of the environment and some of the specified
activities. At the managerial level, the internal control's objectives recount the
consistency of monetary reporting, timely criticism on the accomplishment of outfitted or
some tactical goals. Along with this, another attribute is acquiescence with laws and
policies. This internal control usually involves identifying cases in which robbery or
some kind of loss could take place and determine if the presented control events
efficiently supervise the risk to a satisfactory level. The evaluation of internal controls
are made and changed to build a big business procedure to run further successfully and
effectively. For example, the automation of some controls that are physical in nature can
accumulate costs and perk up processing the transactions for dealing out. The board of
the administrators in an organization provides immense guidance to the management
for the holding of the internal controls as they are the working knowledge of the
organization.
Improvements that could be done in regards to this accounting attribution towards
business is segregating the accounting duties, restricting access to the financial system
and increasing the oversight the small businesses generally depend on A bookkeeper
or on one worker to ensure that all aspects of the accounting system are well
maintained. The processing of cash recipients and the processing of the payments
should segregate within two different people. This will decrease the happenings of
fraud. It is also prudent to alternate persons executing the activities for the
aforementioned activities occasionally. The access restriction to the financial system will
remove the probability of a person creating fake entries and casing up their tracks
[CITATION sig18 \l 1033 ]. An internal control without oversight is not a fine adequate
thing. A suitable assessment of the statements of banking, payments and checking
registers and executing the banking reconciliation processes frequently should be done
to improve the internal controlling.

(c) Main contributions of the payroll system and the pros and cons of the
inventory and billing system
The main contributions of the payroll system in the business are firstly taking care that
the employees are getting their salary in a systematic manner and within time. Secondly
maintaining statutory compliance, that is maintaining a proper labor law code of conduct
for payroll adherence. Thirdly, managing the information of all employees effectively and
fourthly, as all the attributes in the payroll system are automated so it is time-saving in
nature. The payroll apart from all this can evidently generate few reports regarding the
worker's attendance and salary structure in an effective manner as it runs on the cloud.
This payroll contributes hugely for the startups as in many cases for the new startups
the payrolls are free and one can operate through it in an effective manner[ CITATION
San19 \l 1033 ].

The advantages of the inventory system are mainly it is cost-saving along with this it
saves time too. This system maintains data on a real-time basis and also its security by
increasing the efficiency of the business. The system optimizes the resources in regards
to the wholesalers, distributors, and retailers. In regards to some kind of damage or
obsolescence, the inventory system proves to be a boon in minimizing the loss of the
stock. The use of the inventory system profoundly helps the business from economic
fluctuations by saving on to the expenditures. The inventory system helps in the
optimization of the inventories at a greater rate by maintaining an adequate amount of
stocks. The disadvantages of the inventory system are that it is too expensive and every
business cannot afford it. Along with this, the system is a bit complex in nature too and
sometimes can be lengthy. This system does not completely resolve all kinds of risks
that are related to business. That is there is a limitation in the elimination of the
business risk through this inventory system software[ CITATION Chi18 \l 1033 ].

The first and foremost advantage of the billing system is that it is a form of mode that is
paperless. This is environmental friendly indeed. This is an electronic system and thus
helps the sender and the receiver at a greater pace. This system is less expensive and
that why it can be afforded by several businesses. The billing done through this mode is
completely free of any kind of hassle and one can profoundly defend the bill by
password protection process. The system is user-friendly and greatly beneficial for the
bill generators. This saves time than the traditional billing system and the loss in the bill
is also being reduced through this system. Most of the systems of billing are outsourced
from online process. The outsourcing of these billing results in the generation of some
kind of fees through which one can easily use the billing system. This is one of the
advantages of this system. The securitization and safety is another negative side of this
system. As this is an online system so hacking is a very common aspect. The downtime
of the internet also creates some of the major hindrances in electronic billing[ CITATION
sus18 \l 1033 ].

3. Conclusion
The computerized accounting system is a very eminent kind of system in the new era
and it has some of the controlling units that help the business management in a fruitful
manner. In this paper, some of the aspects of the computerized accounting system are
being discussed with some examples to get a proper view of the points. The role of the
accountants in regards to this accounting system is also being broadly discussed with
some latest development in this trend. The internal control system is also being
explained wholly. Lastly, the paper discussed the contributions of the payroll system
which is one of the efficient tools in this accounting system along with the advantages of
the inventory and the billing system. It is also equally playing a great role in maintaining
accounts for a business.
References
Lohrey, J. (2018). What Are the Negative & Positive Impacts of Computerizing an
Accounting Department? Retrieved from smallbusiness.chron.com:
https://smallbusiness.chron.com/negative-positive-impacts-computerizing accounting-
department-31404.html

Reddy, C. (2018). Inventory Management: Features, Objectives, Pros and Cons.

Retrieved fromcontent.wisestep.com: https://content.wisestep.com/inventory-
management-features-objectivespros-cons/

Rush, M. (2018). The Advantages of Manual or Computerized Accounting. Retrieved

from smallbusiness.chron.com: https://smallbusiness.chron.com/advantages-manual-
computerizedaccounting-4910.html

Shenoy, S. (2019). Here's how a good payroll management system can benefit your
startup in the long run. Retrieved from yourstory.com:
https://yourstory.com/2019/06/employee-payrollmanagement-system-startup

Shiraj, M. M. (2015). THE IMPACT OF USING COMPUTERIZED ACCOUNTING

SYSTEMS (CAS) IN FINANCIAL REPORTING AMONG SMES: SPECIAL
REFERENCE TO THE SOUTH EASTERN REGION, SRI LANKA . Retrieved from
www.seu.ac.lk:http://www.seu.ac.lk/researchandpublications/symposium/5th/abstract/
businessandmanagement/16.pdf

signatureanalytics. (2018). 5 Ways to Improve Internal Accounting Controls and

Oversight in Your Business. Retrieved from signatureanalytics.com:
https://signatureanalytics.com/5-ways-toimprove-internal-controls-and-oversight-in-your-
business/

sushindiawriters. (2018). The Advantages And Disadvantages Of Electronic Billing.

Retrieved from sushindiawriters.wordpress.com:
https://sushindiawriters.wordpress.com/2012/12/24/theadvantages-and-disadvantages-
of-electronic-billing/ toppr. (2018). Concept of Computerized Accounting System.
Retrieved from toppr.com: https://www.toppr.com/guides/accountancy/computerised-
accounting-system/concept-ofcomputerized- accounting-system/