Computers in Accounting

 

Meaning of Computers :

A computer in an electronic device, which is capable of performing a variety of operations as directed by a set of instructions. This set of instructions is called a computer programme.

Elements of Computer System

A computer system is a combination of six elements :
1. Hardware
2. Software
3. People
4. Procedure
5. Data
6. Connectivity.

1. Hardware :

Hardware of computers consists of physical components such as keyboard, mouse, monitor, processor etc. These are electronic and electromechanical components.

2. Software :

In order to solve a particular problem with the help of computers, a sequence of instructions written in proper language will have to be fed into the computers. A set of such instructions is called a ‘Program’ and the set of programs is called ‘Software’.

For example, a computer by feeding a particular software can be used to prepare pay-roll, whereas by feeding a second software it can be used to prepare accounts, by feeding a third software it can be used for inventory control and so on.

3. People :

People are basically those individuals who use hardware and software to develop, maintain and use the information system residing in the computer memory. They constitute the most important part of the Computer System. The main categories of people involved with the computer system are :

(a) System Analysis
(b) Operators
(c) Programmers.

4. Procedures :

The Procedure means a series of operations in a certain order or manner to achieve desired results. These are of three types :

(a) Software-oriented – provides a set of instructions required for using the software of a computer system.
(b) Hardware - Oriented – Provides details about the components and their methods of operations.
(c) Internal Procedure – Helps to eusure smooth how of data to computers sequencing the operations of each sub-system of over all computer system.

5. Data :

These are the facts (may consist of numbers, text etc) gathered and entered into a computer system. The computer system in turn stores, retrieves, classifies, organises and synthesises the data to produce information when desires.

Examples –
(1) Bio-data of various applicants when the computer is used for recruitment of staff.
(2) Marks obtained by various students in various subjects when the computer is used to prepare results.

6. Connectivity :

The manner in which a particular computer system is connected to others (say through telephone lines, microwave transmissionsatellite link etc) is called element of connectivity.

Features or Advantages of Computer System

A Computer system posses the following advantages in comparison of human beings :

1. High Speed –

Computers are known for their lightening speed of operations and requires less time in comparison to human beings in performing a task. Most of modern computers perform millions of operations in one second.

2. Accuracy –

Computers are extremely accurate. Their operations are error – free and as such the information obtained from it is highly reliable. But sometimes errors occur due to bad programming or in accurate data feeding. In computer terminology, it refers is called Garbage in, garbage out (GIGO).

3. Realibility –

It realibility refers to the ability with which computer remains functional to serve the user. Unlike human beings these are immune to tiredness, bordom or fatigue. and can perform jobs of repititive nature any number of times.

4. Versatility –

It refers to the ability of computers to perform a variety of tasks. It can switch over from one programme to another. The same computer can be used for accounting work, stock control, sales analysis and even for
playing games by the use of different softwares.

5. Storage –

Memory or Storage capacity of a computer is so large that it can store any volume of information or data. Such data can be stored in it on magnetic discs, Floppy discs, punched cards or microfilms etc. The information stored can be recalled at any time and also correction can be done within no time.

Limitations – Inspite of so many qualities, computers suffer from the following limitations.

  1. Lack of Commonsense - Since computer work according to the stored programms, they simply lack of common sense.
  2. Zero I.Q – Computers are dumb devices with zero Intelligence Quotient (IQ). They can't visualize and think what exactly to do under a paticular situation unless they are programmed to tackle that situation.
  3. Lack of Feeling – Computers lack feelings like human beings be cause they are machines. No computer passes the equivalent of a human heart and soul.
  4. Lack of Decision-making – Decision making is a complex process involving information, knowledge, intelligence, wisdom & ability to judge, Computers cannot make decisions of their own.

Some more limitations related to computerised System in Accounting

  1. High cost of Training – Besides the high cost of computer system, huge money is required to get the trained specialised staff to ensure efficient and effective use of computerised systems.
  2. Danger of System Failure – The danger of system crashing due to hardware failures and the subsequent loss of word is a serious limitation of this system.
  3. Staff opposition – Whenever the Accounting System is computerised, there is a significant degree of resistance from the existing staff because of the fear that they shall be less important to the organisation.
  4. Disruption – The accounting process suffer a significant loss of work and time when an organisation switches over to this system. This is due to the changes in the working environment that requires accounting staff to adapt to new system and procedures.

 

CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari ) 
Email Id : [email protected]

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