What is computer?

Computer is an electronic device which

calculates, compares, modifies,
stores and retrieve facts and
figures, is being widely used in the
field of accounting.
Application of computers in
Accounting:
1. Recording of all business
transactions.
2. Preparation of various ledger
accounts.
3. Processing the payroll information.
4. Preparation of trial balance.
• A computerized accounting system is that
accounting information system that help in
processing the financial transactions and events as
per the GAAP and leads to the generation of reports
as per the requirements of the users.
• An accounting system whether manual or
computerized has two parameters:
a)It has to follow the well defined concepts known as
the accounting principles.
b)It has to maintain the user-defined structure for
maintenance of records and generation of reports.
 CONTEN
• T ACCOUNTING
MEANING OF COMPUTERISED
• TRADITIONAL/MANUAL SYSTEM OF ACCOUNTING
• PROCESS OF COMPUTERISED ACCOUNTING
• FEATUERES OF COMPUTERISED ACCOUNTING
• DIFFERENCE BETWEEN MANUAL ACCOUNTING
SYSTEM AND COMPUTERISED ACCOUNTING
• ADVANTAGES AND DISADVANTAGES OF
COMPUTERISED ACCOUNTING
• PROCESS/STEPS IN COMPUTERISED
FINANCIAL
ACCOUNTING
• ADVANTAGES OF THE COMPUTERISED FINANCIAL
ACCOUNTING SYSTEM
• VARIOUS COMPONENTS OF A COMPUTERISED
FINANCIAL ACCOUNTING SYSTEM
 TRADITIONAL/MANUAL
SYSTEM OF ACCOUNTING

• Input Processing Output

Data & instructions Manual processing Information

 PROCESS OF COMPUTERISED
ACCOUNTING
• Input Processing
Output
Data & instructions
-Cheques/Receipts
-Debit Notes Electronic Processing -Profit & Loss A/c
-Credit Notes Through Computers -Balance Sheet
-Invoices
 FEATUERES OF
COMPUTERISED
ACCOUNTING
1. Fast, Powerful, Simple and Integrated
2. Complete Visibility Enhanced User Experience
3. Accuracy
4. Speed
5. Scalability
6. Power
7. Improved Business Performance
8. Quick Decision Making
9. Complete Reliability
• Recording of data
• Data entering
• Classification and processing of data
• Data Storage
• Reporting
• Accuracy
• Lesser paper work
• Codification of data
• Data sharing
• Adjusting entries
 PROCESS/STEPS IN COMPUTERISED
FINANCIAL ACCOUNTING
• Planning and opening of an
Accounting System
• Entering of data
• Coding
• Bank reconciliation
• Posting
• Printing of trail balance
• Finalization of Accounts
• An accounting software is an integral
part of the computerized accounting
system.
• Need OF Accounting Software:
a. When computerized system is replacing
manual system.
b. When computerized system already
existing in the organization and it is to be
altered according to the recent changes.
• Types of Accounting software?
• Ready to use software
I. Customized software
II. Tailor-made software.
Ready to use software: Which are available in market
for users at large and not for specific users
requirement.
e.g. Tally, EX. Busy, etc.
Advantages
• Easy to learn
• Cost of Installation is low
• Better after sale services
• Take care of problem area.

Disadvantages
1.These software use laser printers which are costly than
Dot matrix.
2.Level of secrecy is very low.
3.Offer very little scope of linking with other
information system.
4.Suitable for small organization.
 Tailor-made Software

means developing a software

according to the needs and
specifications of the user.
These software are
not available off-the-
shelf.
• Advantages
• Take care of thespecific need of the enterprise.
• Level of secrecy of data and authenticity checks are
robust in such soft wares.
• They can be effectively linked to some other
information systems.
Disadvantages
1. Costly
2. Difficult to learn and require specialized training.
3. If the accountsare grouped in an incorrect manner, the
results will be misleading.
 ADVANTAGES OF THE
COMPUTERISED FINANCIAL
ACCOUNTING SYSTEM
• Computerized System has a lot of memory, it can
record and store the large data in its memory, which
is limited one in manual system.
• Due to Coding, it’s easy to record and process with
the data in case of computerized system.
• The system is flexible.
• The information provided by the computer system is
believed to be more accurate, reason being the
chances of mistake are less in this.
 Difference between Manual and
computerized accounting
system
• Speed
The main difference between manual and computerized systems is speed.
Accounting software processes data and creates reports much faster than
manual systems. Calculations are done automatically in software programs,
minimizing errors and increasing efficiency. Once data is input, you can create
reports literally by pressing a button in a computerized system.
• Cost
Another difference between manual and computerized systems is cost.
Manual accounting with paper and pencil is much cheaper than a
computerized system, which requires a machine and software. Other
expenses associated with accounting software include training and program
maintenance. Expenses can add up fast with costs for printers, paper, ink and
other supplies.

Backup
• A third difference between manual and computerized systems is the ease of
backup of a computerized system. All transactions can be saved and backed
up, in case of fire or other mishap. You cannot do this with paper records,
unless you make copies of all pages--a long and inefficient process.
• Financial Statements
In Manual accounting systems Preparation of
trial
balance is essential to produce the financial
statements.. With a computerized accounting
system, financial statement are generated
from the
software itself and therefore there is no need to
prepare trial.

• Reports
Reports are created in a timely manner when using a
computerized accounting system. Reports generated
from
computerized accounting software allow managers to
run the
company in a more efficient manner. Creating reports in a
manual accounting system may lead to more staff frustration
and result in having to work with outdated information.
 What important functions does
the AIS perform in an
organization
1 It collects and stores data about activities and transactions.
2 It processes data into information that is useful for making
decisions.
3 It provides adequate controls to safeguard the organization’s
assets.
4. Provide the database that is used by other information
systems.
5.Producing standard management reports that summarizes the
firm’s financial condition.
• Input: The input subsystem-deals with the
collection, arrangement and making available all
types of transactional, financial and accounting
data to the system, required for its various
functions.
• Process: The processing deals with the processing
of the information gathered by the input sub-
system which is possible with help of INTERNET
and Application software.
• Output: The output subsystem is responsible for
producing the processed data in user
understandable format.
• Control: This Component is responsible for
keeping control over AIS in following manner:
• Follow internal laws and rules of the
organization.
• Follow rules laid down by govt. and statutory
bodies.
• Ensuring quality of information by setting up
performance standards.
• Comparing actual with standard
performance.
• Analyzing the variances and take corrective
measures.
• Ensure safety and security of the information
managed by AIS.
 Characteristics of
AIS
1. Helps in handling and manipulating accounting and
financial transactions of an organization.
2. It is responsible for meeting information needs by
generating reports. These reports are of two types:
a. Reports for outsiders.
b. Internal reports.
3. AIS is helpful in producing futuristic data in the form
of budget forecasts etc.
4. It helps in maintaining accounting information as per
the guidelines of the law.
 Purpose of AIS
• Sales order processing
• Inventory control
• Accounts receivables
• Accounts payables
• Payroll
• General ledger.
Components of an Accounting
Information System
Components of a Computerized
Accounting System

The sales module receives

order data from customers and
maintains accounts receivable
information.
Exhibit 1 Components of an Accounting
Information System
Components of a Computerized
Accounting System
•The purchasing and inventory management
module provides purchase order data to
vendors*.

*Vendors are those who supply specific products to a company.

Components of a
Computerized Accounting
System

The purchasing and inventory

management module maintains
accounts payable and
inventory information.
 Components of a Computerized
Accounting System
The human resources module
maintains data about
employees, including hours
worked and wage rates.

It is used for preparing payroll and payroll tax

information.
Components of a Computerized
Accounting System

The production module tracks

the flow of costs through the
manufacturing process.
Components of a Computerized
Accounting System

The asset management

module identifies long-term
asset costs, their expected
useful lives, and where these
assets are located in the
company.
The financial management
module keeps track of debt,
repayment schedules, interest
rates, and shareholder
information.
Components of a Computerized
Accounting System

The general ledger/financial

reporting module provides
information for use by external
stakeholders, including
shareholders and government
regulators.
 Subsidiary Accounts
Subsidiary accounts include
transactions for individual customers,
suppliers, or products. Records for all
subsidiary accounts of a particular
type are maintained in a subsidiary
ledger.
Thank you
Name: Vivek Singh
chauhan Class: XI B
(Commerce)
Roll No:37