Computerized Accounting

DR. ARADHANA BHOPTE

What is computerized
Accounting?

A computerised accounting system is an accounting

information system that processes the financial transactions
and events as per Generally Accepted Accounting Principles
(GAAP) to produce reports as per user requirements
What Accounting software does?
▪Accounting software automates and streamlines the accounting processes by
using computers to record and track a business’s financial transactions.
▪It is software for financial record-keeping and analysis.
▪It records the purchase of goods and services, sales value and other financial
transactions.
▪Accounting Software saves time, money and resources.
▪It is a business tool for bookkeeping and other financial operations. Accountants
use this software in recording and tracking financial transactions.
▪The software is designed to make accounting tasks easier and more accurate.
Features of Computerized
Accounting System
▪ Data Security
▪Improved Reporting
▪Accuracy and Speed
▪Scalability
▪Quick Decision Making
▪Advanced Features
▪Reliability
Advantages
▪ Accuracy
▪Simplicity
▪Speed
▪Saves time
▪Financial Report Accuracy
▪Standardized Financial Reporting
▪Greater Control/Security
▪Integration
Disadvantages
▪Cost
▪Lack of expertise
▪Heavy Installation and training costs
▪Disruption of Work
▪Loss of employment Security
▪Compromised Accuracy
▪Potential Fraud
▪Technical Failures
Importance of Computerized
Accounting System:
▪ Cost – effectiveness
▪Automation
▪Accuracy
▪Scalability
▪Security
Factors effecting sourcing of Accounting
Software
▪ Nowadays it can be seen that every business uses some form of accounting
software in order to run its daily operations. The importance of software in a
business is growing day by day.
▪Accounting software helps the business in generating a record of all the
business transactions with ease. It helps in avoiding delay by providing all
the facilities needed to record and manage any transaction under one place.
▪The report generated by the accounting software is helpful in determining the
cash flow and financial position of the business, which helps management in
making business decisions.
▪As software has become part of the organisation around the world, it
becomes imperative to look at the factors that influence the choice of
accounting software for a business.
User friendliness: A software that is easy to use and is more adaptable to the needs of
the user is always a hit with the business. It should present the most basic information
required for decision making.
The software should be simplifying the work of the business instead of making it
complicated.
Features: A company or a business should pay attention to the features that the
software provides as it is helpful in choosing the right software required, as per the
requirements of the business.
Accounting software should have functions like invoicing, online payments, payroll, bank
balances, the status of assets and liabilities of the business.
Choosing the right software will help in the smooth functioning of the business, while a
wrong choice can hamper the way records are maintained, leading to discrepancies in
recording transactions.
Price: One of the most important factors that influence business decisions regarding the
choice of accounting software is the price. Software that lacks most of the features
required for your business, yet highly priced should be strictly avoided.
But, if the software is providing the required features at an affordable price, it can be
considered, unless there is a better version of the same software created by another
company.
Compatibility: A software should be compatible with any other software that is being
used to run the business. In simple words, the software should be running smoothly on
the platform being used. For this, the organisation should check if the software is
compatible across multiple platforms.
Security: Security is a primary concern in an ever expanding world of software. Coupled
with advances in technology, intruders often cause data breaches in large organisations,
which leads to loss of revenue and reputation.
Businesses should choose software that provides the best security features in tune with
business requirements. It will ensure uninterrupted operations of the business.
Comparison of Varied Category of
Software
Basis Able to Use Customised Tailored

Small, conventional Large, medium Large, typical

Nature of business
business business business

Cost of installation
Low Relatively high High
and maintenance

Expected Level of
secrecy (Software Low Relatively high Relatively high
and Data)

Number of users and As per

Limited Unlimited
their interface specifications

Linkage to another
Restricted Yes Yes
information system

Adaptability High Relatively high Specific

Training
Low Medium High
requirements
Factors to Consider When Choosing
Accounting Software
▪ User Friendly Software
▪Multi – currency transactions
▪ Web Based Application
▪Integration with other Business software
▪Secure Data
Contd..
▪Customer Support
▪Pricing of Accounting software
▪Flexibility
▪Cost of Installation and Maintenance
▪Size of Organisation
▪Ease of Adaptation and training needs
▪Utilities/MIS Reports
Accounting Software
▪A variety of accounting software is available in the
market. The most popular software utilized in India is
Tally and Ex.
▪The basic features of all accounting software are the
same on a worldwide basis. The legal reporting
requirements during a given country and therefore the
business needs affect the software contents.
▪ The other popular software is Sage, Wings 2000, Best
Books, Cash Manager, and Ace Pays, etc.
Installation of Computerized Accounting
Software
▪ Preparation of Organization Manual
▪Appointment and training of employees
▪Preparation of various forms and reports
▪ classification and codification of Accounts
▪Setting up of cost centres
▪Integration of cost and financial data
Contd..
▪ Introducing Management Accounting Techniques
▪ Setting up Budgetary control system
▪ Using of operations research techniques
▪ Formulating standard costing techniques
9. Who is the developer of Tally?
(i) Wally Feurzeig
(ii) John G. Kemeny
(iii) Nandan M. Nilekani
(iv) Shyam Sundar Goenka
12. Basic function of accounting is
(i) to record all business transactions.
(ii) to interpret financial data.
(iii) to assist the management in performing functions effectively.
(iv) None of the above.
13. Which from the following is better in accounting?
(a) Book Keeping
(b) Computerized Accounting
(c) Both
(d) None
20. Software package is a ______
(a) Machine
(b) Programme
(c) Set of standard programmes