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Introduction To Computerized Accounting

This document provides an introduction to computerized accounting systems. It defines computerized accounting as using computers to record, organize, analyze accounting transactions and communicate financial information according to GAAP. The benefits of computerized accounting systems include efficiency, accuracy, scalability, instant and flexible reporting, and security. Potential limitations include cost, inability to check for errors, security breaches, health issues, and system failure. Computerized accounting systems automate transaction recording and processing, classification, summarization, adjusting entries, and financial statement preparation compared to manual accounting. Popular accounting software packages mentioned include Sage Accounting, Intuit QuickBooks, Easy Books, and Fresh Books.

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Immanuel Kadziwe
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248 views19 pages

Introduction To Computerized Accounting

This document provides an introduction to computerized accounting systems. It defines computerized accounting as using computers to record, organize, analyze accounting transactions and communicate financial information according to GAAP. The benefits of computerized accounting systems include efficiency, accuracy, scalability, instant and flexible reporting, and security. Potential limitations include cost, inability to check for errors, security breaches, health issues, and system failure. Computerized accounting systems automate transaction recording and processing, classification, summarization, adjusting entries, and financial statement preparation compared to manual accounting. Popular accounting software packages mentioned include Sage Accounting, Intuit QuickBooks, Easy Books, and Fresh Books.

Uploaded by

Immanuel Kadziwe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Computerized Accounting (ACP-411)

L1 : Introduction to Computerized
Accounting
By Francis Ganya
(+265) 882370345 / [email protected]

Computing and Information Technology Department


MUBAS
Objectives
By the end of this lesson, students should be able to;

– Define computerized accounting system.


– Discuss the benefits and drawbacks of a
computerised accounting system.
– Discuss the major differences between manual
accounting and computerised accounting.
– Discuss basic requirements of a computerized
accounting system.
Introduction
• We are living in a digital age.
• Businesses adopting usage of computers to enhence
productivity and efficiency.
• Accounting is a core part of every business.
• Increased transactions - Traditional book keeping (Manual)
found to be unmanageable over time.
• With more adoption of computers, manual accouting being
replaced with computerised accounting systems.
Transaction Processing Systems (TPS)
• A transaction => An elementary activity conducted during
business operations.

• A transaction processing system (TPS) processes an entity’s


business transactions and thus support the operations of the
enterprise.
Transaction Processing Systems ....
• A TPS involves the following:
– Data Entry
– Data Validation
– Processing
– Storage
– Information retrieval and reporting

• A CAS is a specialized TPS for handling accounting data


Computerized Accounting
• A computerized accounting refers to the use of computers and
computer based systems to record, organize and analyze
accounting transactions as well as communicate financial
position/performance of an entity.

• A computerized accounting system is an accounting


information system that processes financial transactions and
events as per GAAP to produce reports as per user
requirements..
Why GAAP
• Any accounting system , whether manual or computerized
must has two aspects:

1. Accounting principles : well defined concepts under which it


must operate.

2. User defined framework : which dictates the maintenance of


records and generation of reports.
Basic Requirements of a CAS
1. Accounting Framework - This refers to a set of principles,
coding and grouping structure of accounting.

2. Operating Procedure - This refers to well defined operating


procedures blended together with the operating environment
of the entity.
The software
• The accounting software is at the heart of every computerized
accounting system.
• Implemented using the concept of a database.
• Currently available on the market :
– Sage Accounting ,
– Intuit QuickBooks
– Easy Books,
– Fresh Books,
Benefits of a CAS
• Efficiency
• Accuracy
• Scalability
• Instant and Quality Reports
• Flexible Reporting
• Security
Limitations of a CAS
• Costly
• Inability to check for unanticipated errors
• Security breaches
• Ill Health
• System Failure
Manual vs CAS
• Five key areas:
– Recording
– Classification
– Summarizing
– Adjusting Entries
– Financial Statements
Recording
Manual Computerised
• Transactions recorded in • Transactions recorded in a
books of original entries. well designed database.
Classification
Manual Computerised
• Transactions in books of • Stored data processed to
original entry, further make data appear
classified by posting to classified.
various ledger accounts.
• No duplicity.
• This results in data duplicity
Summarizing
Manual Computerised
• Transactions are • The generation of ledger
summarized to produce accounts is not necessary
trial balance by ascertaining condition for trial balance.
the balances of various
accounts. This necessitaes • Original transactions are
prepation of ledger processed to churn out
accounts. balances.
Adjusting Entries
Manual Computerised
• Adjusting entries are made • There is nothing like making
to adhere to the principle adjusting entries for errors
of matching. and rectifications.
Financial Statements
Manual Computerised
• The preparation of financial • The preparation of financial
statements assumes the statements is independent
availability of trial balance of producing the trial
balance
Reading Assignment
• Explore the following
i. What are the main considerations when selecting the
accounting software for a business?
ii. Explore different types of accounting software available on
the market. Which are the top 5?
iii. What are the differences between different types of
accounting software?
The End / La Fin

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