Chapter 1-Introduction to peachtree Accounting
- 2. 2 CHAPTER ONE – COMPUTERIZED ACCOUNTING SYSTEM – INTRODUCTION Topics to be covered: Computers – nature, components and data representation; Accounting as a data processing system; Manual Vs computerized accounting system; Selection of accounting software;
- 3. 3 …continued Determining the computing platform In-house Vs off-the-shelve-packages Selection criteria for off-the-shelve packages Determining system requirements and installation of packages
- 4. 4 1.1 Computers – Nature, Components, and Data Representations - What natures do different types of computers possess and how are data represented in computers? (Reading assignment) - Components of computers: input and output devices;
- 5. 5 1.2. Accounting as Data Processing System Accounting data processing is the process of identifying, classifying, sorting, recording, summarizing, and reporting the results of business transactions. Different data processing mechanisms may be used such as: (i) Manual system (ii) Mechanical accounting system; and (iii) Automated or electronic data processing (ADP or EDP)
- 6. 6 …continued In general, data processing involves converting a raw data into an output as shown: Input (Raw data) Processing Output - Master records - Invoice processing - Employees’ check - Invoices - Payroll check writing - Inventory balance - Standards/policies - Data entry and - Processed - Payroll data recording records - Sales invoice (this involves the use of - Financial - Source documents journals, ledgers, trial statements and balance, etc) other processed data
- 7. 7 1.3. Manual Vs Computerized Accounting Systems In general, an accounting system includes the processes and procedures by which an organization’s financial information is received, registered, recorded, handled, processed, stored, reported, and disposed of. Manual accounting system is an accounting system that performs data processing manually. (It will be cost effective only for small firms)
- 8. 8 …continued On the other hand, computerized accounting makes use of computers to handle raw data, manipulate the data, and report the results quickly and accurately.
- 9. 9 Advantages of computerized accounting system Advantages of computerized accounting system include: - It enables to handle complex and large transactions easily; - It increases efficiency, accuracy, speed, and timeliness; - It reduces cost in relation to record keeping (cost per transaction)
- 10. 10 …continued - It handles large volume of data; - It enables efficient storage, computation, retrieval, and auditability;
- 11. 11 Disadvantage of computerized accounting system Disadvantages of computerized accounting system include: - High initial cost investment to plan, install, test, and implement the computer system properly; - Thus, it may not be cost-effective for small firms with lesser volume of data to process
- 12. 12 …continued - Initial implementation may be time taking; - It requires specialized skill; - Slow acceptance may there be by employees, clients, creditors, and auditors.
- 13. 13 1.4. Selection of Accounting Software Should a firm develop its own accounting software or buy in externally supplied software? In-house software involves a software that is developed by the firm internally considering the needs of the firm.
- 14. 14 …continued Advantages of in-house software development include: - It is ‘customized’; - Assurance of system compatibility; - Less training cost and implementation time
- 15. 15 …continued Off-the-shelve accounting packages are accounting software that are acquired from an independent vendor. Advantages of such off-the-shelve accounting packages include: - Low risk; - Lower cost;
- 16. 16 …continued - Shorter implementation time; - Standardization; - Avoidance of an in-house effort Commonly supplied accounting software include: - Peachtree*
- 17. 17 …continued - QuickBooks; - ACCPAC; - EXACT; - The Sun; - FAS; - OMICRON;
- 18. 18 How to select off-the-shelve accounting packages? Different selection criterion may be used to acquire an off-the-shelve accounting packages; such as: - Reliability; - Compatibility; - Security; - Flexibility;
- 19. 19 …continued - Extent of training required; - Maintenance.
- 20. 20 1.5. Determining System Requirements and Installation of Packages This involves determining computer specific hardware requirement the selected software would require: such as memory capacity, speed, etc. For example to install Peachtree accounting, the following hardware requirements are needed:
- 21. 21 …continued - A minimum Pentium processor of 150 MHZ; - RAM: 32 MB or 64 MB (or more); - Microsoft windows 95, windows 98, windows 2000; - Hard disk with a minimum of 158 MB free space; - Microsoft excel software installed. - If multiple users exist to access company data, networked computers are also required.