Computerized

Accounting
System
Content
• Introduction of Computerized Accounting
System (CAS)
• Features of Computerized Accounting System
• Elements of Computerized Accounting System
• Advantages and Importance of Computerized
Accounting System
• Limitation of Computerized Accounting
System
Content

• Process of Computerized Accounting System

• Types and methods of Computerized Accounting
System
• Storage accounting system
• Accounting Software
• Features of Accounting Software
 COMPUTERIZED ACCOUNTING
SYSTEM
• A computerized accounting system is an accounting information
system, which processes the financial transactions and prepares the
statements and reports through computer as per the requirement of
the business.
• It is based on accounting database system.
• It is used to prepare journal, ledgers, cash book, financial statement,
reports, payroll sheet, loan settlement schedule etc.
COMPUTERIED ACCOUNTING
SYSTEM
• Company prepares accounting reports or
statements quickly, easily, accurately and in a
reliable way with the help of accounting
software.
• So, the process of recording,
summarizing, analyzing, verifying, and
reporting the financial statement with the help
of computer is called computerized accounting
system.
Features of
Speed Accuracy Reliabilit
Computeriz y
ed
Accounting
System
Security Efficienc
y
 • Accounting data is processed faster
Speed by using a computerized accounting
system. This is because computers
require quite less time in performing
a task.
 • Computers perform functions with
high accuracy. If hardware, software
Accuracy and input by people are proper the
computerized accounting system
can assure accurate outcomes.

• The computer is well-adapted to

Reliabilit performing repetitive operations.
y They don’t feel tired or bored. As a
result, computers are highly reliable.
 • In computerized accounting, only
authorized users are permitted to
Security
have access to accounting data by
which security can be insured.

• The computer-based accounting

systems ensure better use of resources
Efficiency and time. This brings about efficiency
ingenerating decisions,
useful information and reports.
 Hardware
Software
Elements of
Computeriz Users
ed
Accounting Data
System
Procedures
Internal controls
 • It is the tangible physical part of the
Hardwar computer that can be touched or felt.
e It includes keyboard, mouse, Monitor
screen, CPU, Hard disk etc.

• Software are the computer program

required to operate the hardware. It is
Software the interface between the hardware and
user. Types of software are System
software, Application software and
Utility software.
 • These are the users of the system. Internal
users include accountants and other financial
Users officers of the company. Systems are also used
by user outside the organization such a
auditors, consultants, tax authorities, etc.

• Data consist of raw facts. Computer stores

and reads the data in the form of numbers.
Data can consist of letters, numbers, sound,
Data
image or video within the computer. Data is
organized into files. File is simply a set of
data which have been given a name.
 • These include both manual and
Procedures automated methods for collecting,
storing, retrieving and processing data.

• These are the security measures such

as passwords and biometric
identification to protect sensitive data
Internal and to limit access only to authorized
controls users. It also includes protection
against computer viruses, hackers and
other internal and external threats to
network security.
 Faster processing
Advantages/
Importance Maintains accuracy
of Easier availability of
Computeriz
ed
information
Accounting Efficiency
System
Storage
 • Computers require far less time than
Faster human beings in performing a
processing specific task. Hence, accounting data
are processed faster using a
computerized accounting system than
the manual system.

• Computer itself does not make the

Maintains
errors, when accounting professionals
accuracy enter data correctly in the software, it
gives 100% accurate result.
Easier • It is easy to find a financial
availability statements or reports while using
of Computerized Accounting System.
information
• The computer-based accounting
systems ensure better use of time
Efficiency and resources. This brings about
efficiency in generating decisions,
useful information and reports.
 • Computer based systems require a
fractional amount of physical space as
Storage compared to the book of accounts in
the form of journals, ledger and
accounting registers.
 High cost of
installation
Limitations High training cost
of
Computeriz
Fear of unemployment
ed
Accounting
System failure
System
Inability to check
unexpected errors
 • Installing the computerized accounting
system in an organization is additional
High cost of cost to the organization, as a result small
installation scale organizations feel hesitate to set up
such computerized accounting system.

• The operator should be provided with

training to keep them up-dated to meet
High
the changing requirement of the
training cost software system besides having
accounting knowledge.
 • Whenever the manual accounting
system is computerized, the fear of
Fear of unemployment/ loss of job exists
unemployme mainly to the existing accounting
nt staffs. They may have the
perception of reduction of job in the
organization.
• There is challenges with
organizations for continuous power
System supply, and highly skilled
failure technicians. So that, sometimes
computerized accounting system
will be disrupted.
 • Unlike human beings,
Inability to check computers do not have the
unexpected errors capability to judge or detect
unanticipated errors in the
system.
Use of Computer in
Accounting
For preparing the financial statements and
reports.
For security of financial information.
For analyzing operating results and financial
position.
For minimizing accounting errors.
For generating pay-roll sheet, loan
repayment schedule, etc.
 Input
Process of
Computeriz
ed Processing
Accounting
system
Output
 Process of Computerized Accounting
system
• Input: Data, information, facts

• Process: Journal, subsidiary books, ledger,

cash book

• Output: Financial statement, reports

Process of Computerized Accounting
System

Inputting/
entering data
Analysis of
from the
information
information
source
Information Information
processing storage
 Sources of Information in CAS

• Computerized accounting system needs

the source documents before keeping the
records of the financial transactions in the
books of account.
• Main sources of information are:
a) Invoices
b) Receipts
c) Payments
d) Barcode
 Analysis of Accounting
Information

• It is the process of discovering and quantifying

the accounting information in terms of charts,
diagrams, table, image etc.
• It is an act of collecting, processing, storing and
analyzing the financial information for making
financial decision in the business.
• Different statistical and financial tools and
techniques are used for the analysis of
accounting information.
 • It is the process of
interpreting, converting and
summarizing financial data to
generate financial statements
and reports. Some of the
Information output of computerized
information processing are:
Processing
a) Journals
b) Ledgers
c) Financial Statement
Storage of Accounting
Information
• Storage of accounting information is the
process of protecting and preserving the useful
information in different books of account in
computerized system for the future reference.
• The business organization prepares different
books of accounts, financial statements and
reports and stores them in computer system or
electronic data base like CD, DVD, Pen drive,
Hard disks and internet clouds.
 Types of Data Storage

ON-PREMISES COLOCATION STORAGE

STORAGE

CLOUD STORAGE
 Private data storage

Methods of
Data Public data storage
Storage

Hybrid data storage

 Accounting Software
• The application software which is used to perform
computerized accounting system is called
Accounting software.
• It is a tool, which records the financial transactions
under double-entry principle and prepares the
financial statements and reports of the company.
• It supports to prepare the reports relating to
account receivable, account payable, banking
transactions, payroll sheet, inventory, BRS etc.
Features of Accounting
Software
• Invoicing
• Book keeping
• Payroll processing
• Reporting
• Reconciliation of bank accounts
Need/use of accounting software

• Ensuring the financial accuracy

• Saving cost
• Improving data security
• Financial reporting and forecasting
• Invoicing and billing management
• Preparing bank reconciliation
• Purchasing and sales management
 • A Software program created by
Accounting Microsoft to organize data and
Record in perform financial analysis using
MS-Excel spreadsheets is called MS-
•AExcel.
depreciation schedule is a
table that shows how much
Depreciatio each of the assets is
n Schedule depreciated over the years. It
in MS-Excel is an accounting procedure to
regulate the amount of value
that is remaining in a
particular asset.
 • An amortization schedule is a table
Loan format that lists periodic payments
Repayment/Amortizati on a loan or mortgage over a
period. It breaks down each
on Schedule in MS-
payment into principal and interest
Excel
and shows the remaining balance
after each payment
• The process of paying salary to a
company’s employees is called
Payroll Sheet in MS- Payroll. In accounting, the term
Excel payroll indicates the amount paid
out to employees for the work they
have done for the company over a
certain period.
 • A language processor is a software
program designed or used
to perform tasks such as
processing program code to
Language Process machine code.
or
• Different types of language
of software proces processors :
sor 1) Compiler
2) Assembler
3) Interpreter