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A COMPUTER can be defined as an electronic a device which is used for

processing data in accordance with given set of instructions and obtaining results

in any desired form on a prescribed device . It can perform arithmetic and logical

operations .

Computers are automatic electronic machines that can -

Accept(read) data

Store the accepted data in memory.

Manipulate the stored data according to directions given by the user

Produce intelligible reports(results) from manipulated data

Computerized Environment

Today we live in a highly mechanized and dynamic world . Technological

development and ever increasing application of the concepts like mechanization,modernization, globalization, automation and computerization has helped to carry

out the work speedy and accurately. Automation and use of computer in every

phase of business is diving force for evolving speedy methods of management

decisions . New developments in computer data processing continue to appear at a

rapid pace . Technological advances are making computers faster and smaller in

size . In every walk of life , computer has casted its deep impression on the mind

of man . Computers use is not restricted only to accounting and science but it is

now used in every trade and field of business . Hence computer awareness is a

must for every person who intends to relate himself to the business.

Today the computer is used practically in all fields :-Information technology through satellites .Computerized billings (e.g.- telephone bills, electric bills etc)Banks , universities , insurance companies ,corporate sectors, etc use it for

maintaining accounts or records or correspondence.Used by doctors for C.T scanning and sonography.Fashion designers , interior decorators , architects use to view the designs from

various angles.Armies use it for self -guided missiles, planes, tanks etc.

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Selection of Hardware andSoftware for

AccountsToday most of the computers are made from processors equivalent to

Pentium4 with about 60 GB Hard Disc capacity , and loaded with latest version ofWindows as an operating system along with software like MS-Office etc .The

system can also have a secondary storage device for using CD or DVD etc with

USB port . A dot matrix or laser jet / ink jet printer is used to take print outs of the

work done.

Many companies have developed accounting software but Tally and EX

are most popular . Many companies are developing software as per their own

needs . With the development of ERP ( Enterprise Resource Planning ) System

which takes care of operations of entire company in which account is just one part

of it.

Software is also developed / modified considering the local government

taxes and levies so that there is no need to calculate it separately , for example

excise duty sales tax etc are also equally important apart from normal profit and

loss statement being prepared by an accountant .

With the help of window based software learning to use accounting software

is very easy and requires a little knowledge of hardware and software is very easy

and requires a little knowledge of hardware and software part of whole computer .

More over HELP menu built in the software guides to resolve any problem and on-

line help is also available for software like Tally and EX to assist the user. In big

companies where there are lots of vouchers and accounting entries are to be passedmany people are working simultaneously on one system which is also called as

Multi user system. At such places the software also has system administration like

control for editing data /entry , once it is made so as to avoid misuse and fraud

taking place . Generally password based security system is used in all software.

With the development of various management tools for business analysis

todays accounting software not only prepares what is ordinarily called as Balance

Sheet or Profit & Loss A/C but also generates various MIS reports(Management

Information System) . This gives the management very useful information like

debtors position , aging

analysis , movement and inventory of costly raw material, stock position against

production planning,etc. the cost of an ordinary accounting software vary from

Rs.6,000 to more than Rs.20,000depending upon the number of users or location

for its use and ERP systems may cost anything above Rs.3lacs depending upon the

scale of operation of the company.

How to use Computer for Accounting:

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The most of accounting software are very simple to use. The following steps are to

be followed:-

Basic Information: Here basic

information about the company like Name, Address, PAN,VAT/ CST number

, financial year, etc are to be filled.

The Primary Choice:

Accounts Information:

This option enables you to handle all the information relating to financial

accounts . Here you can masters like Groups and sub groups ,Ledgers, Cost

centers, cost categories, etc. For e.g. there can be main groups like assets ,

liabilities , incomes and expenditures etc. These can be further subdivided into

subgroups. Assets can be subdivided into fixed assets, investments, current

assets, etc. further ledgers can be created as per requirements like Conveyance,printing and stationery , postage and other major expenses.

Inventory Information : You can use

this to handle the information relating to the inventory accounts . It enables you

to work on stock items, stock groups , categories units of measurement and

other related information including values.

Voucher Entry : This is

the most frequently used option . This option allows you to make your daily

voucher and invoice entries.

There are further options of Balance Sheet, Profit & loss a/c, stock, summary etc.

The major difference between the manual accounting and computerized accounting

is seen here. In case of manual accounting each entry is posted under suitable

ledger and then totaling is done manually and effect of the same is given in the

balance sheet and profit & loss a/c manually. There is a possibility of human error

at each stage which makes life of accountant miserable . The beauty of accounting

software can be seen here as you have to just enter a voucher and entire work of

totaling and giving its effect in over all system is done automatically by computer.

This saves lots of time and energy of many people working in accounts .

Many softwares have predefined groups as below :

Capital Account

- Capital

- Reserves and Surplus

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Current Assets

-Bank accounts -Cash

in hand

-Deposits (Asset) -

Loans -Advances

-Stock in hand

-Sundry Debtors

Current Liabilities

-Duties and Taxes Payable -Provisions

-Sundry Creditors

Fixed Assets ( each type of asset will have separate head )

Investment

Loans (liability) -Bank

OD accounts -Secured Loans

- Unsecured Loans-Deposits accepted

Suspense account

Miscellaneous expenditures and losses (asset)

Sales account

Purchase account

Other Direct Income Accounts with separate headings

Indirect Income account with separate headings

Direct Expense Account with separate headings

Indirect Expenses accounts with separate headings

Branch / Divisions (Sperate Accounts for each branch and divisions )

Apart from this , software has facility to create a new groups as per the

needs of the organization. Single or multiple ledgers can be created depending

upon the size and needs of the users.

What is better-Manual Accounting or

Computerized Accounting

Every company applies accounting because it is generally accepted that

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companies have to reveal certain financial and management information to the

government and public users and of course because accounting is indispensable

tool in business decision-making process. With the development of information

technologies there were developed many computer products (software) that make

accounting as easy as ABC for those who uses them. From this point accounting

can be divided into two basic categories: those which apply manual accounting and

those which prefer computerized accounting systems.

MANUALACCOUNTING& COMPUTERIZEDACCOUNTING

Manual accounting implies that employees perform the whole accounting cycle

manually on a periodic basis: they calculate trial balances, journalize

transactions, prepare financial statement reports and other routines. Of course it

takes much time, resources and effort in large organizations.

Computerized accounting implies that the only thing that employees do is

recording transactions into the computer which processes the other steps ofaccounting cycle automatically or by a request. But this is a very simplified

view on the computerized accounting because transaction is a complex category

which includes not only sales or acquisitions, but depreciation, premiums and

wages calculation, dividends etc.

So computers provide accurate calculations and smart reports but it takes much

time, resources and effort too and it's difficult to assess which accounting type

is more fast and economic.

If manual accounting requires qualified accountants to keep a record of business

transactions, computerized requires accountants which can use specific software

and thus they cost more.Computer software calculates faster but it does not know what you need until you

can clearly explain what exactly you need.

In addition good computerized accounting system can cost thousands and even

millions dollars, depending on the complexity and the size of organization

Computerized accounting provides better internal control report system for anygiven period of time (computer can control thousands indicators simultaneously

and create notifications to the appropriate departments or workers if some

indicators do not correspond to the normal state), while manual control takes

more time.

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The Advantages of Manual Accounting there are:comparatively cheap workforce and resourcesReliability

independence from machinesskilled workers availability

The Disadvantages of Manual Accounting are:reduced speedincreased effort of accountantsrelatively slower internal control reporting

routine work and some others.

The Advantages of Computerized Accounting are :high speed and mobility of reportingReliabilityno routine work

increased accuracyinternal control system of increased productivity

easy back uprestoration of record

The Disadvantages of Computerized Accounting are:extremely high costs on developingintroducing and using the system,

special trainings for personnelincreased personnel costs

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dependence on machines etc.

Obviously both computerized and manual accounting have advantages and

disadvantages but they perform the same task, and the final result is the same. The

main differences between them are the costs Health Fitness Articles, speed and

mobility.

Thus small and medium businesses usually prefer manual accountingwithout detriment to quality while large corporations apply complexaccounting systems which cost millions dollars but the effect from theirapplication exceeds all the expectations.