Chapter: 17 Computer System in Accounting

 Chapter:- 17

Computer System in Accounting

1. Write the meaning of computer.

Ans:-A computer is a multipurpose, electronic, programmable device that accepts input from the user, stores it and processes it to generate the refined output at an enormous speed. It includes four major components: Input, Memory, CPU (Central Processing Unit) and Output.

2. What are the elements of Computer.

Ans:-Following are the main elements of computer 

a. Hardware: It is the physical part or component of the computer. The four types of hardware are:

b. Input hardware:-It is used to input data into the computer system. Example: Keyboard, Mouse, scanner etc.

c. Output hardware:-It is used to provide or display the result of the processed data. Example: Monitor Screen, Printer etc.

d. Processing hardware:-It is used to process or execute the inputs to produce the output. Example: Central processing Unit (CPU).

e. Memory hardware:-It is used to store data either temporarily during processing or permanently for future reference. Example: RAM, ROM, Hard disk, Pen drive etc.

f. Software: It is the set of programs which is required to operate the hardware. The hardware has no use without software. Different types of software are:

g. System software:-System software is hardware oriented software. It manages the hardware devices and creates the environment to use application software. Example: Widows OS, compiler, driver of printer etc.

h. Application software:-Application software is the user oriented software. It is used to solve the problem of the user and make the user’s task easier. Example: MS Office package, Accounting software, Banking software etc.

i. Utility software:-Utility software is the additional software, used for supporting the operation of system software. It makes the user’s task easier and effective. Example: Antivirus,  Disk management software etc.

3. What are the features of Computer.

Ans:-Following are the main characteristics of computers:

a. Speed:-Computer can complete any kinds of calculation in a few seconds because computer is a super-fast machine.

b. Accuracy:-Computer is very accurate about its result. Each calculation performed by computer is 100% correct.

c. Versatility:-Computer is versatile device, it performs various activities at a time without any confusion and difficulty.

d. Automation:-Computer are automatic machines because once started on a job, they carry out the job until it is finished.

e. Storage:-Computer have high storage capacity, due to which they can store large amounts of data.

f. Security:-The biggest feature of computer is that it provides us high security.

4. What are the importance or advantages of using computers.

Ans:-The advantages of using computers are:

a. Speed:-This is one of the biggest advantage of computer. The computer can perform complex tasks in a short period of time. Thus it saves time and cost.

b. Multitasking:-Multitasking is one of the major benefit of computer. a person can do many different tasks at the same time while working on a computer.

c. Accuracy:-This is the other biggest advantage of computer. They can also give you almost 100% accurate result.

d. Data storage:-Computers can store lot of data or information because its storage capacity is very high.

e. Data security:-Data security is the process of protecting our digital data such as files, databases and accounts etc. from enemy.  

5. What are the disadvantages of using computers?

Ans:- The disadvantages of using computer are:

a. Reduction in employment or unemployment:-Computers can perform many tasks automatically that’s why reduces the needs of people and increases unemployment.

b. Virus attack:-Many viruses can attack the computer. This can cause loss of valuable data of a person or organization.

c. Cyber Crimes:-There are some people who use computers and the internet for negative purpose they break the computers security system and gain like credit card, person’s personal information.

d. Missing physical interactions:-These days people use social media sites for interactions, but real interaction is missing.

e. Decreases learning ability:-Students these days use calculators for calculations and goggle for many simple answers, this can reduce the learning ability and creativity of students.

f. Health issues:-Improper and prolonged use of computers can negatively affect our helths.

6. What are the application areas of computer?

Ans:-Different application areas of computer are:

a. Education:-Computer is used in education for searching study materials, preparing reports or documents or presentation etc. It is also used for online education, online examination etc.

b. Health sector:-Computer is used in health sector for diagnosis. It is also used for record keeping, treatment, surgery etc.

c. Entertainment:-Computers are the major source of entertainment at present. It includes computer games, mobile games, playing audio or video files, social networking etc.

d. Business:-Computers are used in business for record keeping, preparing reports, and documents. It also include online shopping, online advertisement, and online payment.

e. Banking:-Computers are widely used in bank for record keeping, preparing reports, and documents. It also includes online banking, mobile banking, ATM, money transfer facility etc.

7. What is computer system of accounting?

Ans:-Computerized accounting system refers to the processing of accounting transaction through the use of hardware and software in order to produce accounting records and reports. Computer system of accounting is a software program which collects, stores and analyzes the accounting data. Company prepares accounting reports or statements with the help of accounting software.

8. What are the elements of computer system in accounting?

Ans:-The different elements of computer system in accounting are:

a. Hardware:-Hardware is the electronic equipment that includes computers, disk drives, monitor, printers, scanners etc.

b. Software:-Software is the set of programs that direct the computer to perform the desired task.

c. People:-These are the users of the system, like Accountant, Auditors, other financial officers.

d. Procedures:-These include both manual and automated methods for collecting, storing, retrieving and processing data.

e. Data:-Data is the information related to the business activities. It includes sales orders, customer billing statements, purchase requisitions, inventory data, tax data etc. used to prepare accounting statements and reports.

f. Internal controls:-These are the security measures such as passwords, biometric identification to protect sensitive data against unauthorized computer access.

9. Write the Features of computer system of accounting (CSA).

Ans:-The CAS possesses the following features:

a. Simple and integrated:-CAS is easy to use & designed to automate and integrate all the business operations, such as sales, finance, purchase, inventory and manufacturing at a single time and at single place.

b. Speed:-It can perform functions at much higher speed than doing the same manually.

c. Accuracy:-Computers perform calculations with 100% accuracy. It always gives accurate results after data entry.

d. Versatility:-It performs various, activities at a time without any confusion and difficulty.

e. Reliability:-CAS makes sure that generalized critical financial information is accurate, controlled and secured.

10. Write the importance of computer system in accounting.

Ans:-The importance of computer system in accounting are:

a. Faster processing:-Computers requires far less time than human beings in performing a particular task. Therefore, accounting data are processed faster using a computerized accounting system than the manual system.

b. 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. 

c. Easier availability of information:-The data are easily available and can be communicated to different users at the same time.

d. Up-to-date information:-Account balances will always be up to data since the records are automatically updated as and when accounting data are entered or stored.

e. Efficiency:-The computer based accounting system ensures better use of time and resources.

11. Write the limitation of computer system in accounting.

Ans:-The limitations of computer system in Accounting are as under:-

a. High cost of installation:-Computer hardware and software need to be updated from time to time with available new versions. As a result, heavy cost is required to purchase and update the hardware and software every time new versions. It is not suitable for small business.

b. Cost of training:-The user requires special training to ensure efficient and effective use of updated software. When new version of hardware and software are introduced in the market, it requires training cost to train the employees.

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

d. Lack of common senses:-The computer system is run by a predetermined set of instructions. It works simply as per programs stored in the computer. it does not possess any common senses.

e. Inability to check unanticipated errors:-Unlike human beings, computers do not have the capability to judge or detect unanticipated errors in the system.

12. Write the difference between Manual and Computerized Accounting.

Ans:-The difference between Manual and Computerized Accounting are as under:-

S.N. Manual Accounting Computerized Accounting
1 In this accounting all transactions are recorded manually. In this accounting all transactions are recorded by computers using accounting software.
2 Transactions are stored in volumes of books Transactions are stored in databases.
3 It is made for rectification of errors. It cannot be made for rectification of errors.
4 In this accounting more than one user involved. In this accounting single user sufficient.
5 All the calculation is performed manually. All the calculations are performed by computer system.

13. What is Computerized Accounting Process.

Ans:-Similar to the manual system, the computerized accounting system includes the following processes:

a. Inputting/entering data from the information sources.

b. Analysis of information.

c. Information processing.

d. Information storage.

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