The time had gone when accountants and analysts used pen and paper to record accounting entries. Today, computerised accounting are standard across the globe and used by every firm.
With the invention of the internet and the computer systems, many companies have come up with various accounting software at cheaper costs. Though the system has few constraints, such as not able to track inventory, it usually provides sufficient functionality for small and service-based companies.
Meaning of Computerised Accounting System
A computerised accounting system are software programmes designed to store all the firm’s accounting transactions. The recording of all the sale are used while preparing annual financial statements, tax return information, financial output for monthly reports, and other report used to examine businesses profitability, operations, and efficiency.
Advantages of Computerized Accounting System
- The accounts developed by computers are accurate, uniformed, clear, and comprehensive.
- It saves time and increases the efficiency of the employees.
- The computer prepares the account and records in no time with accuracy.
- Computerized accounting minimizes boredom of doing monotonous accounting jobs.
- With the help of accounting software, an individual can easily access data securely outside the office as well. The best example would be internet banking, booking tickets, etc.
- The financial statements arranged by computers are so precise and accurate that anybody can rely on the report.
- The accounting software makes the whole process simpler and faster to prepare an account.
Disadvantages of Computerized Accounting System
- The accuracy of the end report entirely depends on the input of the information.
- Sometime the incompetent and biased employees may alter the data.
- It is expensive.
- There is a cybersecurity threat and it might hinder the whole saved data.
- Too much of the input on the computer might slow down the operating system and affect the work process.
Types of Accounting Softwares
- Ready-to-use Softwares – It is cheap and fit for small enterprises which has less accounting transactions and a low user base. However, such software is less secure and easily subject to risks. This software doesn’t require any specialised training.
- Customized Softwares – The software is customizable to satisfy the customer’s requirement and fit for medium and large firms. The software is costly as well as its training, but a company can use it for a various information system. It is more secure as compare to ready-to-use software.
- Tailored Softwares – It is suitable for big companies that have many divisions and scattered geographically. The cost is extremely high and requires specialized training to utilise the software. The software is highly secure.