Question

Define computerized accounting explain it advantages

Answer 1

Explanation:

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. Every accounting system,

manual or computerised, has two aspects. First, it

has to work under a set of well-defined concepts

called accounting principles.

Advantages of Computerised Accounting System

• Computerised accounting offers several advantages vis-a-vis manual accounting,

these are summarised as follows ;

• Speed : Accounting data is processed faster by using a computerised

accounting system than it is achieved through manual efforts. This is because

computers require far less time than human beings in performing a task.

• Accuracy : The possibility of error is eliminated in a computerised

accounting system because the primary accounting data is entered once

for all the subsequent usage and processes in preparing the accounting

reports. Normally, accounting errors in a manual accounting system occur

because of repeated posting of same set of original data by several times

while preparing different types of accounting reports.

• Reliability : The computer system is well-adapted to performing repetitive

operations. They are immune to tiredness, boredom or fatigue. As a result,

computers are highly reliable compared to human beings. Since computerised

accounting system relies heavily on computers, they are relatively more reliable

than manual accounting systems.

• Up-to-Date Information : The accounting records, in a computerised

accounting system are updated automatically as and when accounting

data is entered and stored. Therefore, latest information pertaining to

accounts get reflected when accounting reports are produced and printed.

For example, when accounting data pertaining to a transaction

regarding cash purchase of goods is entered and stored, the cash account,

purchase account and also the financial statements (trading and profit and

loss account) reflect the impact immediately.