Role and advantage of computerized account system
- 5. Computerized Accounting System A Computerized Accounting System is now a basic necessity and no longer a luxury among businesses. In the past, accounting was done manually by business owners. The process proved time-consuming AND OMIT human error. There were also problems with storage and retrieval of information.Computerized accounting systems have revolutionized the way businesses are conducted. They have enabled companies to paint a more accurate picture of their organization’s financial performance and to make comparisons and across places and periods of that performance.
- 6. MOST FREQUENTLY USED SOFTWARES There are a lot of top accounting software available in every category. So, it is not easy to select the best ones. Below are top five accounting software in every category. A. business/personal accounting software: 1. Peachtree (Best Software) 2. MYOB Plus for Windows (MYOB Software) 3. Peachtree Complete Accounting (Best Software) 4. QuickBooks Online (Intuit) 5. Small Business Manager (Microsoft) B. Low-End Accounting Software: 1. BusinessVision 32 (Best Software) 2. MAS 90 & MAS 200 (Best Software) 3. QuickBooks Pro 2003 (Intuit) 4. ACCPAC Pro Series (ACCPAC International) 5. Vision Point 2000 (Best Software)
- 7. C. Middle-Market Accounting Software: 1. ACCPAC Advantage Series Corporate Edition (Best Software) 2. Great Plains (Microsoft) MAS 90 & MAS 200 (Best Software) 3. Navision (Microsoft) 4. SouthWare Excellence Series (SouthWare) 5. SYSPRO (SysproUSA) : 1. Axapta (Microsoft Software) D. High-end accounting ERP Market 2. e-Business Suite (Oracle) 3. MAS 500 (Best Software). 4. Solomon (Microsoft) 5. ACCPAC Advantage Series Enterprise Edition (Best Software)
- 9. MAJOR ROLES OF COMPUTERIZED ACCOUNTING Material Management Purchasing / Receiving / Stores Production Manufacturing Support - Production Planning, Quality control, Maintenance Marketing Distribution Personnel Finance Information - Accounting /Computer Services Materials Labour Capital Information
- 10. MAJOR ADVANTAGES Speed – data entry onto the computer with its formatted screens and built-in databases of customers,supplier details and stock records can be carried out far more quickly than any manual processing. Automatic document production – fast and accurate invoices, credit notes, purchase, printing statements etc all done automatically by softwares. Accuracy – there is less room for errors as only one accounting entry is needed for each transaction rather than two (or three) for a manual system. Up-to-date information – the accounting records are automatically updated and so account balances (e.g. customer accounts) will always be up-to-date. Availability of information – the data is instantly available and can be made available to different users in different locations at the same time. Current time information – reports can be produced easily which will help management monitor and control the business,
- 11. Legibility – data is easy to read.the onscreen and printed data should always be legible and so will avoid errors caused by poor figures. Efficiency – better use is made of resources and time; cash flow has improve through better debt collection and inventory control. Staff motivation – the system will require staff to be trained to use new skills, which can make them feel more motivated. . Cost savings – computerized accounting programs reduce staff time doing accounts and reduce audit expenses as records are neat, up-to-date and accurate. Reduce frustration – management can be on top of their accounts and thus reduce stress levels associated with what is not known. The ability to deal in multiple currencies easily – many computerized accounting packages now allow a business to trade in multiple currencies with ease. Problems associated with exchange rate changes are minimized.
- 12. Peach Tree Peachtree is an accounting application for small and medium-sized businesses (SMBs) made by Sage Software. Peachtree enables controllers and managers to automate and manage numerous accounting tasks, like: * Reconciling accounts payable and receivable. * Creating financial statements, * check invoices. * Tracking banking transfers and payroll. * Importing and manipulating spreadsheets. * Integrating scanned documents like checks, receipts and invoices, eliminating paper from the accounting
- 13. Sage Software's release of Peachtree Premium Accounting for Construction is customized specifically for the needs of contractors operations managers in the construction industry Small construction companies and individual contractors both use construction industry-specific functions like job costing, fixed assets tracking, progress billing and advanced budgeting to control costs, track expenses and organize billing. Peachtree also makes industry specific versions for accountants, distributors, manufacturers and non- profit organizations.
- 14. SYSTEM REQUIRMENT Peachtree minimum system requirements include at least a 1 GHz processor and 512 MB of RAM for a single user installation of Peachtree. Sage suggests 1 GB of of free disk space, Internet access, Internet Explorer 6.0 and at least Windows 2000 SP3.
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- 18. 1) LIMITATIONS OF COMPUTERIZED ACCOUNT SYSTEM 2) GENRAL LIMITATIONS OF ACCOUNT SYSTEM 3)LIMITATIONS OF MANUAL ACCOUNT SYSTEM
- 19. Computerized Accounting System ALTHOUGH Accounting System is now a basic necessity but as we know that with each positive there is some negative too,same is with accounts system,its serving us really well but also got some draw back.
- 20. DISADVANTAGES OF COMPUTERIZED ACCOUNT SYSTEM Cost When using accounting software, you must buy the software and any additional licenses necessary for other users and computers. Some software requires you to purchase upgrades or updates for additional features. You must also ensure your computer is capable of running the software. If not, you'll need to upgrade your computer as well. Dependent on Computers If your computer crashes or data is corrupted by a virus, you won't be able to use your accounting software until the problem is fixed. This also means you won't have access to any entered data until the computer is running again. Your data can also be corrupted, meaning you will have to re-enter information unless you've backed up your files. In addition, if there's a power failure, your software will be unusable unless you're on a battery-powered laptop. Fraud Accounting software data requires extra levels of security to prevent problem like fraud and embezzlement. Software makes it easier for users to alter data, making fraud easier to accomplish. As a result, there is an increased need for internal auditors to check for any data inaccuracies. Security measures must also be taken to limit the amount of control users have over any accounting software's features.
- 21. Additional Software Most accounting software requires you to have additional software in order to view reports. For instance, some programs allow you to export data as a PDF file or an Excel spreadsheet. This allows users without the accounting program to view the data. However, the viewing software may pose an additional expense to the user. Human Error While it is easy to write down numbers incorrectly, it is even easier to mistype a number. Entering data into accounting software too quickly may result in serious errors. With the program performing calculations, it can be more difficult to trace the cause of the problem. Spreadsheets, digital ledgers or written ledgers make tracking simpler and faster. Training Accounting software requires you to take the time to learn how to use it. While you may be an experienced accountant, you'll still need to learn what each button and menu command does in order to use accounting software effectively. This learning curve can result in costly errors. In some cases, paid training may be necessary to learn how to perform certain tasks. If you're not tech savvy, the process could be
- 22. Time Many accountants find that it takes more time to enter data into accounting software than it does to write it or type it into a spreadsheet. Due to step-by- step screens, the process often takes longer, especially for those who don't use the software often or are still new to using the program. If the software requires numerous steps to enter basic data, the time requirements may outweigh the benefits of automatic calculations Maintenance Maintaining accounting software not only includes performing upgrades to the accounting software package, but also maintaining and upgrading all the necessary equipment to utilize the accounting software as new versions can require upgraded equipment. That equipment often includes your PC or laptop, monitor, printer, Internet connection and modem, backup drive and operating system. If you do not wish to spend the time and money to keep your equipment in compliance with the accounting software, it is best to stick to spreadsheet or ledger accounting.
- 23. General limitations of accounts Different accounting policies and frameworks Suppose we are using two different methods of calculations,geographically used in different areas or countries,there statement don’t match so when people from different region do such business,they face the problems too. The use of different accounting frameworks (e.g. IFRS, US GAAP) by entities operating in different geographic areas also presents similar problems when comparing their financial statements. The problem is being overcome by the growing use of IFRS and the leading accounting bodies are trying to arrive at a single set of global standards. Accounting estimates Accounting requires the use of estimates in the preparation of financial statements where precise amounts cannot be established. Estimates are inherently subjective and therefore lack precision as they involve the use of management's foresight in determining values included in the financial statements. Where estimates are not based on objective and verifiable information, they can reduce the reliability of accounting information.
- 24. Verifiability Audit is the main mechanism that enables users to place trust on financial statements. However, audit only provides 'reasonable' and not absolute assurance on the truth and fairness of the financial statements.there is not a sort of surety in this… Use of historical cost Historical cost is the most widely used basis of measurement of assets. Use of historical cost presents various problems for the users of financial statements as it fails to account for the change in price levels of assets over a period of time.account predicts for future by in keeping previous calculations estimates which may prove wrong in future like in case of depreciation,you purchase an asset of 10000 rupees in 2007,in 2009 accounts shows 50 % depreciation but in facts its value has been increased by 100 %...that is possible too… That is a suspected area in accounts too…
- 25. Measurability (Only Cash) Accounting only takes into account transactions that are capable of being measured in financial terms. Therefore it don’t count your personal servings such as the competence of workforce or goodwill. Limited predictive value It can only predict for a limited future era.Depending upon the previous calculations and statements. Fraud and error Financial statements are susceptible to fraud and errors which can undermine the overall credibility and reliability of information contained in them. It is completely depends upon the the person who is auditing your firm can give you a true or false statement too.So in short accounting calculations are always suspected.(also known as 'window dressing') has been a unfortunate reality in the recent
- 26. Subjective Measurement Accountants have to attach a monetary value to every event or transaction that has taken place within the organization. Sometimes the monetary value of the transaction is impossible to be ascertained. Consider the case of depreciation. Accountants can at best provide estimates of the depreciation that should have taken place given the scale of operations. However, these estimates are usually way off the mark. This makes accounting policies open to debate as well as manipulation. Qualitative Factors Accountants try to attach a monetary value to everything. The things they cannot attach a monetary value to are not accounted for! Consider the case of goodwill. Until the organization has explicitly paid for the goodwill it purchased from another company, it cannot account for goodwill. According to accountants, the goodwill generated by the firm internally is worthless. We all know that this is not the case and therefore accounting is flawed as far as goodwill is concerned.
- 27. Unstable Unit of Account Accountants have to measure all transactions in a single unit of account. This unit of account is usually the currency that is being used in a particular country. However, it is common knowledge that the value of currencies is not stable. Inflation, deflation and such other forces make currency values dynamic. When accountants express assets purchased in last year’s rupees with the same unit as purchased by this year’s rupees, it presents a distorted image. Many companies have low book values because their assets were purchased a long time back during periods of no inflation. No Information about Opportunity Cost Accountants provide information about what has happened. However, management would be better off if they had information about what could have happened if they used their resources in the optimum manner. This feature is also lacking in accountancy making its usefulness limited from the managerial
- 28. ONLY FINANCIAL RECORDING Accounting records only those transactions which can be measured in monetary terms. DON’T RECORD CHANGE OF PRICE Accounting transactions are recorded at cost in the books.The effect of price level changes is not brought into the books with the result that comparison of the various years becomes difficult. For example, the sale to total asset in 2009 would be much higher than in 2002 due to rising prices , fixed assets being shown at the cost and not at market price.
- 29. NOT REALISTIC Accounting statements are prepared by following basic concepts and conventions. Therefore the accounting information may not be realistic. Incomplete knowledge of costs JUST MAKE ESTIMATES No provision of cost control Financial accounting does not help business organization for controlling the cost. Because, there is no provision of controlling cost in it. In financial accounting, we write cost, if we paid any expenses. Thus there is no provision of improvement in financial accounting. Except this, there is no any other way to inspect
- 30. Disadvantages of manual accounts system Time consuming It is much more time consuming than the computerized one. More error possibilities Because of manual doings this sytem have more error omitting possibilities. Less efficient It is much inefficient than the computerized one. Slower access to the data Less current time availability Require physical space for storage Much more cotly Large number of staff required Mostly Illegible Problem in finding the mistake