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CBSE Class 12 Commerce Accountancy Using Computerized Accounting System For Complete Notes

CBSE Class 12 Commerce Accountancy Using Computerized Accounting System For Complete Notes

CBSE Class 12 Commerce Accountancy Using Computerized Accounting System : The CBSE goal of the Academic, Training, Innovation and Research unit of Central Board of Secondary Education is to achieve academic excellence by conceptualising 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 programmes. 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 Using Computerized Accounting System For Complete Notes

CBSE Class 12 Commerce Accountancy Using Computerized Accounting System : An accounting system is a collection of processes, procedures and controls designed to collect, record, classify and summarize financial data for interpretation and management decision-making. Computerized Accounting involves making use of computers and accounting software to record, store and analyze financial data.

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.  The package I use for our small to medium business is MYOB (Mind Your Own Business) accounting software.

Download Here CBSE Class 12 Commerce Accountancy Using Computerized Accounting System For Complete Notes In PDF Format 

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.

The 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

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.

CBSE Class 12 Commerce Accountancy Using Computerized Accounting System For Complete Notes

CBSE Class 12 Commerce Accountancy Using Computerized Accounting System : How is your company doing? Being able to answer that question requires you to know how much money you’re making, which in turn requires accurate bookkeeping. Keeping accurate financial records is crucial to the success of any business, so it’s important to know your options.

While some firms still do their bookkeeping by hand, most firms generally have too many transactions to sustain a manual accounting system. The more complicated the financial activities of your business are, the more likely it is that you’ll need a computerized accounting system to ensure effective financial reporting. Computerized accounting systems are software programs that are stored on a company’s computer, network server, or remotely accessed via the Internet.

Computerized accounting systems allow you to set up income and expense accounts, such as rental or sales income, salaries, advertising expenses, and material costs. They also can be used to manage bank accounts, pay bills, and prepare budgets. Depending upon the program, some accounting systems also allow you to prepare tax documents, handle payroll, and manage project costing.

You can generally customize the software to meet the needs of your business. It’s important to make sure that your staff are trained and understand how to use the system correctly so that your company can successfully use your accounting program.

The Different Types

As you start looking at computerized systems, you’ll find that there are a lot of options! Basic features tend to be consistent across most programs. It’s helpful to compare several to see which features and capabilities best match your business operations.

Generally, the least expensive computerized options are pre-developed, off-the-shelf accounting software packages. These are software packages that typically offer common functions that apply to most businesses, and usually have some flexibility to customize certain features to meet the needs of a company. Most businesses, however, will find they may need to adapt their processes to match how the software works.

CBSE Class 12 Commerce Accountancy Using Computerized Accounting System For Complete Notes

CBSE Class 12 Commerce Accountancy Using Computerized Accounting System : An accounting system is a collection of processes, procedures and controls designed to collect, record, classify and summarize financial data for interpretation and management decision-making. Computerized Accounting involves making use of computers and accounting software to record, store and analyze financial data. A computerized accounting system brings with it many advantages that are unavailable to analog accounting systems. This article does not tackle the use of spreadsheets that are often used instead of proper accounting software to process financial data. It is common knowledge that spreadsheets do not provide a salable solution for accounting purposes and therefore are a dangerous solution to invest in.

Here we detail about the advantages and disadvantages of computerized accounting system.

Advantages of Computerised Accounting System:

The main advantages of using a computer accounting program are as follows:

(i) Faster Processing:

Computers require far less time than human beings in performing a particular task. Therefore, accounting data is processed faster using a computerized accounting system.

(ii) Accurate Information:

There is less space for error because only one account entry is needed for each transaction unlike repeated posting of the same accounting data in manual system.

(iii) Reliability:

Computer systems are immune to boredom, tiredness or fatigue. Therefore, these can perform repetitive functions effectively and are highly reliable as compared to human beings.

(iv) Easy Availability of Information:

The data can be made available to different users at the same time. This is called data sharing.

(v) Up-to-date Information:

Account balances will always be up to date since the records are automatically updated as and when accounting data is entered or stored.

(vi) Efficiency:

The computer based accounting system ensures better use of time and resources.

(vii) Storage and Retrieval:

Computer based systems require a fractional amount of physical space as compared to the books of accounts in the form of journals, ledgers and accounting registers.

(viii) Works as a Motivator:

Employees using computer systems feel more valued as they are trained and specialized for the job.

(ix) Automated Document Production:

Accounting reports like cash book, trial balance and financial statements are generated automatically and are easily accessible just by a click of mouse.

(x) MIS Reports:

It is easier to monitor and control the business using the real time management information reports generated by the computerized information systems.

CBSE Class 12 Commerce Accountancy Using Computerized Accounting System-Limitations of Computerized Accounting Systems:

The main limitations of Computerised systems are being dependent upon the operating environment they work in.

Some of them are listed as follows:

(i) Heavy Cost of Installation:

Computer hardware needs replacing and software needs to be updated from time to time with the availability of newer versions.

(ii) Cost of Training:

To ensure effective and efficient use of computerized system of accounting, newer versions of hardware and software are introduced. This requires special training and cost is incurred to train the staff personnel as specialists.

(iii) Fear of Unemployment:

Reflects the feelings of the staff on the introduction of computerized accounting system. The staff fears redundancy and show less interest in computers.

(iv) Disruption in Work:

When computerized system is introduced, there might be loss in the work time and certain changes in the working environment.

(v) System Failure:

The danger of a system crashing due to some failure in hardware can lead to subsequent loss of work. This occurs when no back-up is retained.

(vi) Time Consuming:

In order to avoid loss of work at the time of system failure, there is a need for providing back­up arrangements which is a time consuming process.

(vii) Unanticipated Errors not Known:

Unlike human beings, computers do not have the capability to judge or detect unanticipated errors in the system.

(viii) Breaches of Security:

The danger of viruses and hacking into the system from outside creates a strong need for security of system. Similarly, the person who has created the specific program can easily defraud by tempering with the original records.

(ix) Health Dangers:

Extensive use of computers may lead to many health problems such as eyestrain, muscular complaints, backache etc. resultantly reducing working efficiency as well as increasing medical expenditure.

CBSE Class 12 Commerce Accountancy Using Computerized Accounting System For Complete Notes

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