The process of recording of business transactions in journal,classifying them,posting in appropriate ledger and preparing the trial balance and financial statement with the help of computer is known as ‘Computerised system of accounting’.
Advantages of computerised accounting:
1. Speed and accuracy:
Man has limited memory. He cannot process large accounting data with speed and accuracy.But we can work with computers very fast.Computers provide accounting information to the required within minutes.Computers provide is more accurate information then human being.
2. · Security:
The latest data can be saved and stored in offsite locations so it is safe from natural and man-made disasters like earthquakes, fires, floods, arson and terrorist attacks. In case of a disasters, the system can be quickly restored on other computers.
3. Up date Information to the management:
Account balances will always be up to date since the records are automatically updated as and when accounting data is entered or stored.So it can easily provide updated information to the management.
Disadvantages of computerised accounts:
1. Very expensive:
installation of computers,and computerizing the accounts with trained staff is very expensive.Hence all business firms cannot afford.
2. Hinders the development of human memory:
The use of computers hinders the development of human memory.
3. Stand by computer:
If there is any break-down of any part of the computer,all operations will become stand still.And is there any physical damage of computer we loss all the data.
4. Data Hacking:
The growth of technology there is more chances to hacking the personal and valuable data of the firms or any business concern.And more chances for cyber crimes.
Applications of a computerised accounts:
A computer can applied to almost all types of accounting and technical matters such as follows.
- Inventory control.
- Pay roll accounting.
- purchase accounting.
- Sales accounting.
- Management information system.
- Market research.
- Pay roll management.
- Quality control.
- New product developments.
- Input and output analysis.