Gujarat Board GSEB Textbook Solutions Class 11 Commerce Accounts Part 2 Chapter 11 Computers and Accounting Textbook Exercise Questions and Answers.
Gujarat Board Textbook Solutions Class 11 Accounts Part 2 Chapter 11 Computers and Accounting
GSEB Class 11 Accounts Computers and Accounting Text Book Questions and Answers
Write short note on :
(1) Components of Computerised Accounting System.
Following are the three important as well as main components of Computerised Accounting System :
2. Software and
3. Human ware.
1. Hardware : Hardware refers to the physical elements of a computer. This is also sometime, called the machinery or the equipment of the computer. Example of hardware in computer are the Central Processing Unit (CPU), Keyboard, Monitor, Mouse, DVD drive, Pen drive, Printer, Sound card, Speakers, etc. These components of computers are also classified as Input devices, CPU and Output devices. Mouse, Keyboard, Touch screen, Bar code reader, etc. are included in Input devices. While Central Processing Unit (CPU) is known as brain of computer as it does all calculations, logical decisions and controls activities of machine. CPU comprises of control unit, memory unit and arithmetic and logical unit. While output devices comprises of Monitor, Printer, Speaker, etc.
2. Software: Software is a general term for the various kinds of programmes used to operate computers and related devices. In other word, computer programmes which are needed to get the work done through the various parts of computer is known as software. Software can be divided mainly into two categories : (1) System software and (2) Application software. System software is used to control the operations and to extend processing capability of a computer system. While Application software is used by users to perform specific functions. For example, Windows 7 is system software while Tally is application software.
3. Humanware : The word Humanware is used for the people, who work with computer and software, e.g., programmers, data entry operators, software engineer, hardware engineer, system analyst, etc. These people also play an important role in effective implementation of computerised accounting system.
(2) Features of computerised accounting system
Features of computerised accounting system are as under :
- Speed : Computer can perform functions at much higher speed. It leads to quick preparation of accounts and makes available the accounting statements and records on time.
- Memory power : Computer has the amazing power of data storage. Capacity of data storage is known as memory.
- Accuracy : Computers perform functions with high degree of accuracy. The accounts prepared with the help of computer are accurate and possibility of errors is negligible.
- Working capacity: Working capacity of computer is much higher than human strength. It can work continuously for days.
- Cleanliness : The computerised accounts are much clean as compared to manual accounts.
- Reliability: Computers are immune to tiredness, boredom or fatigue. So it always provides reliable information.
- Versatility : Computer and accounting software has ability to perform diverse tasks.
- Automating : Computer is a machine designed to work automatically. It always works as per given information or order.
- Automation of accounting process: If in the business, proper selection of computer system, accounting software and persons to manage them is made, automations will result into so many advantages. At the same time, if any of these components are faulty, it can distort the outcome.
- Reports and Statements : Accounting reports and statements can be prepared at phenomenal speed by using the accounting software.
(3) Accounting Software
Accounting software describes a type of application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll and trial balance. It functions as an accounting information system.
Types of Accounting Software : Following are the categorise of Accounting Software :
1. Ready-made Software : Ready-made softwares are the softwares that are developed not for any specific user but for the users in general. Since, the ready-made softwares are for general user, it is not necessary that all the modules of such softwares are of use for every user. These types of softwares are economical. Some of the ready-made softwares are Tally, Tally Ex, Busy, Profit and Professional Accountant. Out of all these ready-made softwares available in market. Tally appears to be most popular and widely used accounting software. As such software is used by so many people it is easy to get persons for operating the same.
2. Customised Software : When ready-made software is modified according to the need of the customer or user, it is called customised software. When ready-made software is modified according the need of customer, it provides ease to customer. But they are not economical, customer has to pay for additional charges for modification of ready¬made software. Advantages and disadvantages of this type of software are same as that of readymade software. For example, design of invoice is modified according to the need of customer.
3. Tailor-made Software : Tailor-made software is software that is made to the specifications of a client. Some customers get accounting software developed completely as per their need. As such software are designed and developed according to need of a customer, they are not readily available in the market. As such software is designed keeping in mind the requirements of the customer, customer gets all information, facilities and statements as required using such software. However, it can be more expensive than the ready-made one.
While sourcing the accounting software, its cost, need of the organisation, flexibility, facility of data exchange or transfer, need for training, cost of maintenance, etc. should be kept in mind.
(4) Accounting reports
Accounting reports can be prepared easily by using accounting software. Accounting reports are designed keeping in mind the need for such report. Data when processed becomes information. When related information is summarised and presented so as to meet a particular need, then it becomes report. Such reports become useful to the users thereof in decision making process. While designing an accounting report, its objectives contents, completeness and utility should be kept in mind to make it meaningful. Examples of some such accounting reports are as under:
- Cash flow statement,
- Creditors’ report,
- Debtors’ report,
- Product-wise cost report, (5) Profit-Loss Account and (6) Balance Sheet.
(5) Accounting Information System (AIS)
Accounting Information System (AIS) is a system of processing data relation to financial transactions in such a manner that useful information is made available for internal decisions of the unit as also to outsiders. Accounting Information System (AIS) is a part of Management Information System (MIS). Information provided by AIS is useful to managers in internal decision making. Such information also becomes useful to external parties.
Management Information System (MIS) is a wide system as compared to Accounting Information System (AIS). MIS can comprise of Production Information System, Marketing Information System, Accounting Information System, Human Resources Information System, etc. In short we can say that, MIS provides other informations with accounting information.
From the above discussion, we can state that Accounting, Information System (AIS) makes various useful accounting information available to internal and external users that helps users in decision making.
AIS can provide following reports or statements relating to accounting :
- Profit and Loss statement: From this statement, external parties can get information about profit or loss, i.e., result of business. Directors can get information about profitability of different products or division or department, from this statement.
- Balance Sheet: From this statement, internal ancj external parties can get information about the financial position of the units, i. e., information about the assets and liabilities of the unit.
- Debtors’ report: Such report can give information relating to debtors or customers as per business organisation’s need.
- Creditors’ report: Such report can give information relating to creditors or suppliers as per business organisation’s need.
- Other reports : Business organisation may prepare other reports as per need. For example, Report about information of bank transactions for information to Managing Director.
How does Accounting Software provide facility for data exchange with other information system ?
In the following ways, accounting software provide facility for data exchange with other information system :
- Through internet web browser, any information can be accessed at any time from anywhere. If authorised, such accounting information can be modified, copied or print out can be taken.
- Accounting information can be uploaded. For example, if information about each sale bill is uploaded for filling VAT, return, filling of return will be very easy.
- Accounting information can be transferred by e-mail, with such features or facilities, lot of money and time is saved.
- Accounting information or statements can be exported. For example, Balance Sheet can be exported in Excel Sheet.
State the advantages of Computerised Accounting System.
Following are the advantages of Computerised Accounting System :
(1) At the time of preparing accounts, compliance of legal requirements can be made easily.
(2) Accounting information can be obtained at phenomenal speed / speedily.
(3) Accounting information can be obtained at any place and at any time.
(4) Reliability and Authenticity is increased in accounting information.
Accounting information becomes more reliable and authentic.
(5) Accounting information can be stored.
(6) Various accounting reports depending upon the need of organisation can be generated.
(7) Information can be manipulated as per need.
(8) Necessary information or report can be uploaded easily.
(10) Chances of fraud or manipulation can be reduced.
(11) Chances of errors are reduced in accounting information.
(12) Accounting information can be transferred or exchanged easily by e-mail.
(13) Accounting information or statements can be exported.
(14) Various accounting reports can be prepared easily using accounting software.
(15) With the help of computers, ledger entries becomes simple and speedy for posting.
(16) Accounts prepared by the computers are much more decent.
(17) It is possible to get number of copies of the required statement.
(18) Quick decisions based on the accurate- information or summary is possible.
(19) Computerized accounting reduces the monotony of doing repetitive accounting jobs, which are tiresome and time consuming.
(20) Computerized accounting facilitates standardization of accounting routines and procedures.
State the limitations of Computerised Accounting System.
Following are the limitations of Computerised Accounting System :
(1) Investment: A small firm cannot install a computer accounting system because of its high installation and maintenance cost. Many times, units invest huge amounts in selection of improper hardware and software and they are not able to take’ due advantage of such investment.
(2) Specialized operators : Computer system calls for highly specialized operators. The availability of such skilled personnel is very scarce and very costly.
(3) Fiear of unemployment: Computerisation can lead to increased unemployment as the accounting work with the help of automation requires small number of persons as compared to manual accounting. Therefore, the staff fears redundancy and show less interest in computers.
(4) Defective programmes : If software or computer programmes are defective, desired benefits thereof cannot be obtained.
(5) Changes in technology: Frequent changes take place in computer hardware and software. Therefore, computer hardware and software should be selected keeping in mind the long term need in such manner that the investment does not become useless in a very short time. Investment in outdated technology will result into frequent expenses to upgrade the same.
(6) Insufficient work : If the business unit has insufficient work of accounting, then this system becomes costly and cumbrous.
State the differences between the Traditional Manual System and Computerised Accounting System.
|Difference||Traditional Manual System||Computerised Accounting System|
|1. Meaning||Manual accounting is the system in which we keep physical register of journal and ledger for keeping the records of each transaction.||In Computerised system of accounting, we use computer and different accounting software for digital record of each transaction.|
|2. Recording transaction||Transactions are recorded in manual books of account like journal and subsidiary books.||Transactions are recorded by using computers and accounting software like Tally or Profit or any other.|
|3. Posting||Recorded transaction have to be posted in different ledger accounts manually.||Recorded transactions are processed by accounting software and posting into respective ledger account is automatically done.|
|4. Trial balance||Trial balance is to be prepared after collecting the necessary balance of each ledger account.||Trial balance is automatically prepared using accounting software.|
|5. Financial statements||Financial statements like Profit and Loss A/’c. Balance Sheet, Cash flow statement, etc. are prepared manually.||With the help of accounting software, financial statements like Profit and Loss A/c, Balance Sheet, Cash flow statement, etc. are automatically prepared.|
|6. Cleanlines and Accuracy||In this system, cleanliness and accuracy are less maintained.||In this system, cleanliness and accuracy are more maintained.|
|7. Rectification of errors||Rectification entries are required to be passed for rectification of errors.||With the help of accounting software, any wrong entry can be rectified or deleted easily without passing rectification entry.|
|8. Opening balances||After close of the year, every year, in the beginning of year, opening balances are required to be carried forward in the new books of accounts.||There is no need for recording opening balances as the accounting software automatically stores information about the closing balances in its data base.|
|9. Title of accounts and Grouping of accounts||In this system, title of each account is manually decided and pre-defined groups of accounts also have to be designed manually.||In this system, accounting software gives ready-made groups of accounts and ledger accounts are opened under these groups. However, title of each account is to be manually decided.|
|10. Time and Speed||This system does take time to prepare accounts.||With the help of accounting software, accounts are prepared quickly and in less time.|
|11. Quick information||In this system, accounting informations and reports are not received quickly.||Accounting informations and reports are received quickly by using accounting software.|
|12. Calculation||In manual accounting, all calculations of adding and subtracting are done manually.||In computerized accounting, all the calculations are done by computer system.|
|13.Adjustment entries record||Both adjustment journal entries and its posting in the ledger accounts will be done manually one by one.||Only adjustment entries will pass in the computerized accounting system, posting in the ledger accounts will be done automatically.|
Answer the following questions in brief :
(1) State names of some ready-made accounting software available in the market.
Following are some of the ready-made accounting softwares available in the market:
Tally, Tata Ex, Busy, Professional Accountant, Profit, Account Mate, CYMA, Intacct, SAP Oracle, Kashoo, Less Accouting, Sage, etc.
(2) Out of all the ready-made accounting software available in market, which one appears to be the most popular and widely used accounting software ?
Out of all the ready-made accounting software available in market, Tally is the most popular and widely used accounting software.
(3) What is tailor-made accounting software ?
Some customers / clients get accounting software developed completely as per their need. This type of software are not readily available in the market. Therefore, it is known as tailor-made accounting software. In other word, tailor-made accounting software is software that is made to the specification of a customer / client.
(4) Give the name of any four groups of accounts.
The name of four groups of accounts are as follows :
- Bank Accounts,
- Bank OCC Account.
- Capital Account and
- Current Assets.