A computerized accounting system refers to accounting software and processes that allow businesses to record, store, manage, and analyze financial transactions and data electronically.
Here are the notes for Computerized Accounting System, Chapter 26 of Class 11:
Topics Discussed
Difference between Manual Accounting and Computerized Accounting
| Basis | Manual Accounting | Computerized Accounting |
| Identifying Financial Transactions | In this system, the identification of financial transactions is done manually by applying the principles of accounting. | In this system also, the identification of financial transactions is done manually by applying the principles of accounting. |
| Recording | The transactions are firstly recorded either in the journal or in subsidiary books. | A software named ‘Tally’ is fed into the computer. Thereafter, transactions are recorded in Tally. |
| Classification | In this system, classification i.e., posting to ledger A/c is done manually. | In this system, the stored data are processed automatically by the software to give us ledger A/c. |
| Summarising | In this system, summarising i.e. balancing of ledger A/c & the preparation of trial balance is done manually. | In this system, transactions once recorded are stored in the database that will produce a trial balance automatically. |
| Adjustment Entries | The identification, recording & posting of adjustment entries is done manually. | In this identification & recording of adjusted entries is done manually & their posting etc. is done by software. |
Advantages of Computerized Accounting System
- High Speed
- High Reliability
- Accuracy
- Updation of Information
- Lower cost
- Efficiency
- Storage and Retrieval
- Legibility
Limitations of Computerized Accounting System
- Staff opposition
- High cost of training
- Security problem
- System failure
- A lot of errors
Types of Accounting Software
1) Ready to Use Software
A variety of ready-made software is available in the market. This software is for users at large and is not developed according to the requirements of any specific user. For example: Tally, Busy, etc.
2) Customised Software
The term ‘Customised Software’ means making changes in the ready-to-use software to suit the specific requirements of the user.
3) Tailor-Made Software
This term means developing software according to the needs and specifications of the user. These software are not available off the shelf.
Introduction to Computers
Computer
A computer is a device capable of solving problems by accepting data, performing described operations on the data, and supplying the results of these operations.
Features of a Computer System
- A computer is an automatic machine: Once the data and instructions are fed into a computer, it executes them one by one without human intervention.
- Memory or Storage: The memory of a computer is so large that it can store any volume of information or data for being processed.
- High Speed: Computers are known for their lightning speed of operations. The speed is so high that it is ordinarily expressed in microseconds.
- Accuracy: Computers are extremely accurate. Their operations are error-free and as such the information obtained from it is highly reliable.
Limitations of a Computer System
- Lack of decision-making: Computers are only helpful in decision-making they cannot make their decision on their own.
- Lack of intelligence quotient: Computers are mere machines with zero IQ.
- Lack of common sense: A computer keeps on working as per its programming and fails to analyze the logical aspect of it.
- Lack of feelings: Computers are devoid of emotions and they have no feelings because they are machines.
Financial Statements with Adjustments Class 11 Notes
Components of a computer system
- Hardware: A computer system is made up of several electronic components. These components are known as hardware.
The main components are as follows:
a) Keyboard
b) CPU
c) Monitor
d) Magnetic Recorder - Terminal: The keyboard and monitor put together are known as a terminal.
- Keyboard: The devices that are used to feed data and programs into a computer are called input devices. Keyboards are one of such devices.
- Monitor: A computer displays the results, reports, or answers on a screen known as a monitor.
- Central Processing Unit(CPU): This unit is the main and most important part of a computer which consists of a group of complex electronic circuits. It is the brain of the computer.
- Magnetic Recorder: It permanently stores the data and information fed into a computer and is also known as a memory unit.
Memory of a computer is of two types:
a) Volatile Memory = It stores the data permanently.
b) Non-Volatile Memory = It stores the data permanently.
Elements of a Computer System
A computer system is a combination of six elements:
- Hardware
- Software
- People
- Procedures
- Data
- Connectivity
Difference between Hardware & Software
| Basis | Hardware | Software |
| Meaning | Computer components that can be physically touched are known as computer hardware. | A set of programs that is used with hardware to perform computer applications is known as software. |
| Examples | Keyboard, monitor, CPU, magnetic recorder, etc. | Operating system, utility software, system software, etc. |
Role of Computer in Accounting
- General Ledger: Once transactions are recorded on a computer, it is automatically posted to various accounts.
- Accounts Receivable: This software is used to maintain the up-to-date and accurate accounts of the debtors.
- Accounts Payable: It keeps an up-to-date record of all the creditors.
- Inventory Control: It keeps a complete record of receipts and issues of all the items in the stores so that the information is readily available.
- Payroll Accounting: It prepares the wages and salary shut off thousands of employees very accurately and in no time.
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