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CBSE Class 12 Commerce Accountancy Overview Of Computerized Accounting System Complete Details

CBSE Class 12 Commerce Accountancy Overview Of Computerized Accounting System : The goal of the Academic, Training, Innovation and Research unit of Central Board of Secondary Education is to achieve academic excellence by conceptualizing policies and their operational planning to ensure balanced academic activities in the schools affiliated to the Board. The Unit strives to provide Scheme of Studies, curriculum, academic guidelines, textual material, support material, enrichment activities and capacity building programmed. The unit functions according to the broader objectives set in the National Curriculum Framework-2005 and in consonance with various policies and acts passed by the Government of India from time to time.

CBSE Class 12 Commerce Accountancy Overview Of Computerized Accounting System Complete Details

CBSE Class 12 Commerce Accountancy Overview Of Computerized Accounting System : Accountancy or accounting is the job of sharing financial information about a business to managers and shareholders (people who have invested in the business).[1]Accounting is often called the “language of business”. Accountants are people who do accounting, and also carry out the auditing or checking of a company’s books and records. In Britain, this auditing is often carried out by a qualified person called a “chartered accountant”.

When accountants do accounting work, they write in the books of account (ledgers) that belong to a company. Every time money is spent or earned, it is written in the ledger. The information in the ledger is used to prepare the company accounts monthly, quarterly (every three months) and annually (every year). These annual accounts show what money the company has taken in over time and what it has spent money on.

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CBSE Class 12 Commerce Accountancy Overview Of Computerized Accounting System Complete Details

CBSE Class 12 Commerce Accountancy Overview Of Computerized Accounting System : A Computerized Accounting System is now a basic necessity and no longer a luxury among businesses of whatever orientation and size. In the past, accounting was done manually by business owners. The process proved time-consuming, cumbersome and prone to human error. There were also problems with storage and retrieval of information, not to mention consolidation and reporting. Computerized accounting systems have revolutionized the way businesses are conducted. They have enabled companies to paint a more accurate picture of their organization’s financial performance and to make comparisons and across places and periods of that performance.

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Computerized Accounting System Advantage

A computerized accounting system also allows analysis of the stored information. This is particularly crucial in the crafting of business and strategic plans especially as competition in the specific business or industry heats up. A computerized accounting system will work with whatever type of business. This is because any business in general, whether it produces products or delivers services, has a basic structure: input, process and output. There are uniform reporting requirements and accounting principles to comply with and use.

There is a world of difference between a computerized accounting system and a manual one. First is the cost. A computerized accounting system may cost more in the short term, but this is if you do not factor in the ensuing productivity and savings in the long run. Then again, a computerized accounting system is not as expensive these days as it was when it first became popular. Speed is also a prime consideration. The same amount of work can be performed by a computerized accounting system in a fraction of the time that a manual system can do it.

Finally, only a computerized accounting system offers a backup mechanism that will enable the user to retrieve the data even when it has been lost. This is one feature that is not found in any manual system. All these considerations support the benefit of using a computerized accounting system as opposed to a manual one. According to Mr. Tan having a computer accounting system totally revolutionized his shoe repair business. In the past, he only took note of the number of job orders and multiplied them by the standard fees. But he could not keep track of everything especially as the demand for his services grew and he had to open new branches.

With a computer accounting system, keeping track of how the business is doing in all three locations has become immensely easy for Mr. Tan. He no longer has to worry about whether his manager in all three branches are doing their job accordingly just because he cannot be present in all three locations at the same time. The computerized accounting system has enabled him to compare and analyze why this branch is doing better than the others, or what another branch must do in order to maximize its revenue potential. As a result, Mr. Tan now has more information at his fingertips. It is easy to make business decisions when there are numbers and figures backing up these decisions.

CBSE Class 12 Commerce Accountancy Overview Of Computerized Accounting System Complete Details

CBSE Class 12 Commerce Accountancy Overview Of Computerized Accounting System :  Let me start this article by saying I am a qualified accountant who has taught accounting at a variety of levels for over 18 years.  I have also worked extensively as a business consultant for small and medium size enterprises.  I am continually amazed when I come across a business either not using a computerized accounting package or using spread sheets to do their accounts.  Therefore I decided to write a short article on the benefits of using a computerized accounting package.
Small and medium sized businesses can now buy ‘off the shelf’ accounting programs at remarkably low cost.  Larger businesses will often have customized programs made for their business.  The accounting programs carry out functions such as invoicing, dealing with payments, paying wages and providing regular accounting reports such as trading and profit and loss accounts and balance sheets.

AccountingThe introduction of computerized accounting systems provide major advantages such as speed and accuracy of operation, and, perhaps most importantly, the ability to see the real-time state of the company’s financial position.  In my experience I have never seen a business that has upgraded to a computerized accounting system return to paper based accounting systems. A typical computerized accounting package will offer a number of different facilities.  These include:

– On-screen input and printout of sales invoices
– Automatic updating of customer accounts in the sales ledger
– Recording of suppliers’ invoices
– Automatic updating of suppliers’ accounts in the purchases ledger Recording of bank receipts
– Making payments to suppliers and for expenses
– Automatic updating of the general ledger
– Automatic adjustment of stock records
– Integration of a business database with the accounting program
– Automatic calculation of payroll and associated entries

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Computerized accounting programs can provide instant reports for management, for example:

– Aged debtors’ summary – a summary of customer accounts showing overdue amounts
– Trial balance, trading and profit and loss account and balance sheet
– Stock valuation
– Sales analysis
– Budget analysis and variance analysis
– GST/VAT returns
– Payroll analysis

When using a computerized accounting system the on computer, input screens have been designed for ease of use.  The main advantage is that each transaction needs only to be inputed once, unlike a manual double entry system where two or three entries are required. The computerized ledger system is fully integrated.  This means that when a business transaction is inputed on the computer it is recorded in a number of different accounting records at the same time.

The main advantages of a computerized accounting system are listed below:

Speed – data entry onto the computer with its formatted screens and built-in databases of customers and supplier details and stock records can be carried out far more quickly than any manual processing.

Automatic document production – fast and accurate invoices, credit notes, purchase orders, printing statements and payroll documents are all done automatically.

Accuracy – there is less room for errors as only one accounting entry is needed for each transaction rather than two (or three) for a manual system.

Up-to-date information the accounting records are automatically updated and so account balances (e.g. customer accounts) will always be up-to-date.

Availability of information – the data is instantly available and can be made available to different users in different locations at the same time.

Management information – reports can be produced which will help management monitor and control the business, for example the aged debtors analysis will show which customer accounts are overdue, trial balance, trading and profit and loss account and balance sheet.

GST/VAT return – the automatic creation of figures for the regular GST/VAT returns.

Legibility ­– the onscreen and printed data should always be legible and so will avoid errors caused by poor figures.

Efficiency – better use is made of resources and time; cash flow should improve through better debt collection and inventory control.

Staff motivation – the system will require staff to be trained to use new skills, which can make them feel more motivated.

Cost savings – computerized accounting programs reduce staff time doing accounts and reduce audit expenses as records are neat, up-to-date and accurate.

Reduce frustration – management can be on top of their accounts and thus reduce stress levels associated with what is not known.

The ability to deal in multiple currencies easily – many computerized accounting packages now allow a business to trade in multiple currencies with ease.  Problems associated with exchange rate changes are minimized.

CBSE Class 12 Commerce Accountancy Overview Of Computerized Accounting System Complete Details

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