Computerised Accounting System

What is Computerised Accounting?

The computerised accounting system is an accounting data system that processes the financial transactions and transactions as per GAAP (Generally Accepted Accounting Principles) to produce reports as per user demands. Every accounting system, either computerised or manual, has 2 aspects. First, it has to work under a set of well-defined theories known as accounting principles. Another, that there is a user-defined structure for the maintenance of records and the creation of reports.

In a computerised accounting system,  the structure of storage and processing of data is known as an operating environment that comprises of hardware as well as software in which the accounting system, works. The kind of accounting system used defines the operating environment. Both hardware and software are interdependent. The type of software defines the formation of the hardware. Further, the choice of hardware is reliant upon many factors such as the number of users, level of privacy and the nature of multiple activities of operational departments in an organisation.

Computerised Accounting System – All You Need to Know

Q.1- WHAT IS A COMPUTER? STATE THE LIMITATIONS OF COMPUTER.
ANSWER:
COMPUTER
  • The computer is an electronic device, which is used to perform substantial computations, including numerous arithmetic and logic operations
  • Without the intervention of a human operator.

LIMITATIONS OF COMPUTERS
  • It does not have learning power.
  • Cannot make Judgment based on feeling and knowledge.
  • They cannot think & learn as humans do.
  • They cannot express their ideas.
Q.2- WHAT ARE THE CHARACTERISTICS OF COMPUTERS?
ANSWER:
CHARACTERISTICS OF COMPUTERS
  • Accuracy
  • Speed
  • Automation
  • Storage capacity
  • Reduction in time
  • Reduction in paperwork
  • Reliable
Q.3-BRIEFLY EXPLAIN THE ELEMENTS OF A COMPUTER SYSTEM?
ANSWER:
ELEMENTS OF A COMPUTER SYSTEM
  • Hardware
  • Software
  • Humanware
HARDWARE The components that can be seen or touched are called hardware of the computer.
SOFTWARE Software is a set of program and a set of instruction on the basis of which a computer operates.
HUMANWARE Humanware is a set of people working in connection with the computer.
Q.4- BRIEFLY EXPLAIN THE FOLLOWING COMPONENTS OF COMPUTER HARDWARE.

(A) PROCESSOR

(B) MOTHERBOARD

(C) RANDOM ACCESS MEMORY

(D) READ ONLY MEMORY

(E) SECONDARY MEMORY UNIT

(F) MOUSE

(G) KEYBOARD

(H) MONITOR

(I) SPEAKER

(J) PRINTER

ANSWER:
(A) PROCESSOR
  • The processor or microprocessor or Central process unit is a small chip that resides in the motherboard.
  • It tells the computer how to control the flow of the instructions.
  • The processor has different parts:
  • Control unit: This unit of the processor controls all the activities of the processor and also controls the input and output devices of the computer.
  • Arithmetic Logic Unit: it performs the mathematic calculations like additions, subtractions, multiplications and makes a logical comparison of different numbers.
  • Memory Unit: A processor has its own memory inside it in the shape of small cells. Each memory cell is called a “Register”. Data comes in registers from primary memory (RAM) of the computer.
(B) MOTHERBOARD

 

  • The motherboard is the main circuit board of your computer and is also known as the mainboard or logic board.
  • In motherboard, many devices are added such as CPU, ROM, memory, RAM expansion slots, PCI slots, and USB ports.
(C) RANDOM ACCESS MEMORY (RAM)
  • RAM is also known as volatile memory or Primary memory.
  • RAM is the memory where data and program instruction are stored while the computer is in operation.
  • The data store in RAM is lost forever when the power is turned off.
(D) READ ONLY MEMORY (ROM)
  • It is a non-volatile memory.
  • The data cannot be stored in ROM.
  • ROM which holds the data permanently that cannot be changed.
(E) SECONDARY MEMORY DEVICES
  • It is a memory where programs and data are kept on a long-term basis.
  • Secondary memory devices are Hard disk, portable flash drives, CDs, DVDs.
(F) MOUSE
  • The mouse is an electro-mechanical, hand-held device.
  • It is used as a pointer. It can be used for selecting menu commands, moving icons.
(G) KEYBOARD
  • It is an input device that is used for input of text or numbers into the computer in the CUI (Character User Interface).
(H) MONITOR
  • It is also called ‘Computer Screen’ or ‘Display’.
  • It is part of the computer system which visually communicates with the user.
(I) SPEAKER
  • It is a device that converts analogue audio signals into the equivalent air vibrations
  • In order to make an audible sound.
(J) PRINTER
  • Printers are devices used for producing information as a hard copy.
Q.5- BRIEFLY EXPLAIN THE COMPONENTS OF COMPUTER SOFTWARE.
ANSWER:

Computer software can be divided into the following three categories.

(A) OPERATING SOFTWARE:
  • It is a set of programs, active all the time in the memory of the computer,
  • It manages the resources of the computer for their better and effective use. Example – Windows XP Software.
(B) UTILITY SOFTWARE
  • It is a set of computer programs used to perform supporting operations on a computer.
  • Utility Software usually focuses on how the computer infrastructure (including the computer hardware, operating system, application software and data storage) operates.
(C) APPLICATION SOFTWARE
  • Application Software is the user-oriented program.
  • It is designed and developed for performing certain jobs, such as accounting, word processing and designing.
Q.6- WHAT IS THE MEANING OF HUMANWARE?
ANSWER:
HUMANWARE
  • People interacting with the computer and executing the program or software are known as Humanware.
  • They use hardware and software to develop, maintain and use the information system of the computer memory.
Q.7- WHAT DO YOU MEAN BY DATA, INFORMATION AND INFORMATION SYSTEM?
ANSWER:
(A) DATA
  • Data is the basic component of the information;
  • It can be understood as the information that is raw and unorganised.
(B) INFORMATION
  • It is a transformed set of data in such a way that it helps to reduce future uncertainty.
  • It contributes to the decision making the process.
(C) INFORMATION SYSTEM
  • Information System is an integrated set of components for collecting, storing, processing and communicating information.
Q.8- WHAT DO YOU MEAN BY MANAGEMENT INFORMATION SYSTEM (MIS) AND ACCOUNTING INFORMATION SYSTEM (AIS)?
ANSWER:
(A) MANAGEMENT INFORMATION SYSTEM
  • ‘MIS’ is a computerized database of financial information organized and programmed
  • In such a way that it produces regular reports on operations for the management of an operation.
(B) ACCOUNTING INFORMATION SYSTEM
  • It is a system of collecting, storing and processing financial and accounting data
  • That is used for the purpose of decision making.
  • Components of an Accounting Information system are: People, data,
  • Software, procedure, Information Technology and internal controls.
Q.9- WHAT ARE THE ADVANTAGES OF COMPUTERISED ACCOUNTING SYSTEM?
ANSWER:
(A) ADVANTAGES OF COMPUTERISED ACCOUNTING SYSTEM
  • Speed
  • Accuracy
  • Reliability
  • Efficiency
  • Security
  • Up-to-date information
  • Real-time user interface
  • Automated document production
  • Legibility
  • Lower Cost
  • Quality reports
  • MIS reports
  • Storage and retrieval
Q.10- WHAT ARE THE LIMITATIONS OF COMPUTERISED ACCOUNTING SYSTEM?
ANSWER:
(A) LIMITATIONS OF COMPUTERISED ACCOUNTING SOFTWARE
  • System failure
  • Cost of training
  • Staff operation
  • Disruption
  • Inability to check unanticipated errors
Q.11-BRIEFLY EXPLAIN THE KINDS OF ACCOUNTING SOFTWARE?
ANSWER:
(A) KINDS OF ACCOUNTING SOFTWARE

 

Accounting software can be classified into three categories:

  • Readymade Software
  • Customised software
  • Tailor-made-software
(B) READYMADE SOFTWARE
  • Readymade Softwares are the software that is developed not for any specific user but for the users in general.
  • It is suitable for a small organisation where the volume of accounting transactions is very low.
  • Readymade Softwares are Economical
  • This software is easy to learn.
(C) CUSTOMISED SOFTWARE
  • Customised Software means making changes in the readymade software to suit the specific requirements of the user.
  • It is suited for large and medium business.
  • The cost of installation and maintenance is relatively high.
  • The vendor has to be paid for customisation.
  • Secrecy of data and software can be better maintained.
  • The training costs are high as users have to be trained for using the software.
(D) TAILOR-MADE SOFTWARE
  • It is a software that is specially developed for some specific organisation or for other users.
  • It is an important part of MIS.
  • It is developed for the large business organisation with multi-users.
  • This software requires specialized training to users.
Q.12- WHAT FACTORS ARE TO BE CONSIDERED WHILE SOURCING AN ACCOUNTING SOFTWARE”
ANSWER:
(A) FACTORS ARE CONSIDERED WHILE SOURCING AN ACCOUNTING SOFTWARE
  • Size of organisation
  • Cost of installation and maintenance
  • Flexibility
  • Ease of Adaptation and Training Needs
  • Utilities
  • Exporting and importing data facility
  • Expected Level of Secrecy

The above mentioned is the concept, that is elucidated in detail about the ‘Computerised Accounting System’ for the class 11 Commerce students. To know more, stay tuned to BYJU’S.

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