Computerized Accounting
Computerized Accounting System means an accounting information system that processes all financial transactions of the business following the widely accepted accounting principles (GAP) to generate reports as required. It is a database based application where transactions are stored in an organized form.
COMPARISON of COMPUTERIZED & MANUAL ACCOUNTING SYSTEM
|
COMPUTERIZED ACCOUNTING |
MANUAL ACCOUNTING |
|
Manual Accounting is a system of accounting that uses physical registers system and account books system, for keeping financial records |
Computerized Accounting is an accounting system that uses an accounting software, for recording financial transactions electronically |
|
Recording is possible through book of original entry. |
All the data contents is recorded in customized database |
|
All the calculation is performed manually |
Only data is input required then the calculations are performed automatically by computer system |
|
Slow |
Comparatively faster |
|
Not Possible |
Input entries of transactions can be saved and backup in computer |
Advantages of Computerized Accounting System
Speed in Work: Computerized accounting process is completed at a much faster pace than the accounting process done by manuals. This is the reason that even the smallest merchant I adopting it today.
Update: In this accounting system, the accounts which are entered daily, the immediate information is received about the effect on the accounts, whereas this is not possible in manual accounting.
Clarity: In this, the data visible on the computer monitor can be read easily whereas in manual accounting it is not so.
Read Also:
Computer Abbreviations Full Form
Advanced Excel Functions Notes PDF in English [FREE]
Downloads Free Ready-Made Excel Templates
MS. Excel Shortcut Keys in PDF Free Download
Best Computer Courses After Intermediate
What is Accounting & Types of Accounting
Accounting Methods and Information Systems
What is CPA Marketing, How to do it and how to earn money from it?
Efficiency: In this accounting method both time and resources are saved, which leads to efficiency in decision making. In fact, it is possible to do the accounting work in the best way in the stipulated time.
Flexible Reporting: It is convenient to get the desired flexible reporting by this accounting method, such as reporting the amount received from debtors to different extent.
Minimum Cost: This accounting system is economical as compared to manual accounting system and in this the work gets completed very quickly.
Storage: In this, users store accounting data in such a way that it does not require much space, as accounting data is stored in hard disk or in PAN drive.
Disadvantages of Computerized Accounting System;
Training Cost: Computerized accounting system can be operated only by a person with special knowledge of accounting system and proficient in computer. The cost of training of such a person is also high.
High Installation Cost: Not only computers and printers are required to perform accounting operations with this method, but new hardware and software also have to be purchased which costs more..
Security Problem: In this accounting method, the stored data gets deleted when a virus enters the system. Along with this, data can be easily changed in it, which is also very difficult to retrieve.
Possibility of Failure: In this accounting system there is always a possibility of the system to fail. In this, in case of hardware failure; the whole system pays off, which also affects the accounting work.
Protest by the Employees: When computerized accounting system is adopted in the institutes, it is opposed by the employees working in the institute because they fear that they will have to lay off and lose their job.
Bad Effect on Health: Continuous use of computer has adverse effect on manual health, especially on eyes, back pain and joint pain.
Accounting Information System
Accounting information system is a system by which accounting reports related to the business and the financial position of the business are made available to the parties related to the business.
Accounting information system refers to the process in which the data of day-to-day financial transactions of the organization are collected and their lawful accounting is done and by converting the information of this data, it is necessary to provide necessary information to the internal and external parties.
Characteristics of Accounting Information System
- This system helps in collecting and analyzing all the financial transactions of the organization.
- This system provides information to both the internal and external parties of the organization in the form of reports according to their needs.
- This system integrates the accounting information according to the codes to be given as per the prevailing statutory rules.
- In this, the accounts are grouped automatically.
- In this, such reports can be prepared by making changes in the information as needed, which are helpful in taking managerial decisions.
- This system is also helpful in budget preparation.
Types of Accounting Information
Income Related Information: The income earned by the organization in a given period is called income related information. This information is obtained from the profit and loss account or income statement of the organization.
Information of Financial Position: Information about the position of the institution on a given date is called information of balance sheet of that institution. This information is obtained from the status statement, in which information about the financial condition, payment capacity etc. of the institution can be obtained.
Production Related Information: Information about the cost, quantity, operating expenses etc. of the goods produced is included in this. This information is obtained from the construction account of the organization, in large institutions its information is obtained from the cost accounts.
Information Related to Human Resource: The number of employees working in the organization, salary payable to them, and expenditure on their welfare, allowance, bonus, health, and security related information are included in this.
Information Related to the Environment: This includes information related to employment, taxes and fees, environmental protection etc., given by the business to the society in the form of products or services.
Cash Flow Information: This information is related to the cash received and paid in a given period. Information about this can be obtained through income statement, balance sheet and other additional information.
