Chapter 10
Computer in Accounting
Q.1 Objective questions :
A. Select the most appropriate alternatives from those given below and rewrite the statements.
1) The primary document for recording all financial transactions in Tally is the .............
a) Journal
b) Trial sheet
c) Voucher
d) File
2) This displays the balance day wise for a selected voucher type.
a) Record Book
b) Ledger book
c) Journal book
d) Day book
3) Fixed Deposit A/c comes under ............... group.
a) Investments
b) Current Liability
c) Bank A/c
d) Current Asset
B. Give the word term or phrase which can substitute each of the following statements:
1) The details of Bills Receivable are maintained in this record .
Ans: Sundry Debtors
2) Tally software is classified into this category .
Ans: Mercantile
3) The short key used to save or accept the information .
Ans: Ctrl + A
4) It is a damaged software, cracked, nearly fully functional .
Ans: Pirated Software
5) The process by which all the calculations are automatically done by the accounting software.
Ans: Automation
C. State whether the following statement are true or false with reason :
1) Alt + D are the short key for delete voucher entry.
Ans: True
2) In Tally F6 Functions key is for Payment Voucher.
Ans: False
3) Legal software is fully functional software without any restriction.
Ans: True
4) Salary Account comes under Indirect Expenses.
Ans: True
5) Accounting software may not be customized to meet the special requirement of the user.
Ans: False
D. Answer in One Sentences :
1) What is CAS?
Ans:
CAS means Computerized Accounting System which helps business firms to implement accounting processes and makes it user friendly with automation.
2) Write the steps to create Ledger account in tally?
Ans:
Steps to create ledger account in tally are as follows :
(1) From Gateway of Tally Screen, click on account info.
(2) Path gateway to Tally – Accounts Info – Ledgers – Single ledger – Choses create.
3) How to view reports in tally?
Ans:
For viewing accounting reports in accounting software click on report option and select the Display option.
4) Explain the various type of voucher?
Ans:
Following are the various voucher types :
(1) F4 Contra voucher – For cash deposited in the bank and cash withdrawn from bank, Transfer from one cash A/c to other Cash A/c and Bank to Bank transfer
(2) F5 Payment voucher – For all types of payments are recorded through this voucher type (Cash and Bank) Cash or Bank
(3) F6 Receipt voucher – For Cash and Bank receipts
(4) F7 Journal voucher – For non-cash transactions
(5) F8 Sales voucher – For cash as well as credit sales
(6) F9 Purchase voucher – For cash as well as credit purchase.
5) Write the steps to create a company?
Ans: Following are the steps to create a company :
(1) After entering into Accounting software Tally, double click on the option, create company, under company information. Then follow the navigation path. Gateway of Tally > Company Info > Create Company.
(2) Fill the details in the company creation form, displayed on the screen – Company creation window.
Q.1 What is Accounting Software?
Ans.
Accounting software is a type of computer software used by accounting professionals to manage accounts and perform accounting operations. Accounting is the systematic practice, work or process of communicating and recording financial information. Accounting software can range from simple, single-entry programs used for individual record-keeping to more sophisticated, double-entry systems that can process accounts receivable, accounts payable, payroll, purchase order, sales order, book keeping, invoicing and inventory etc.
(2) Write the Steps to create a Ledger account in Tally.
Ans. Steps to create a Ledger account in Tally:
→ Gateway of Tally menu
→ Double-click on Account Info.
→ Account Info. (Menu appears)
→ Then double-click on the Ledgers option
→ The Ledger menu appears
→ Double-click on the Create option under the Single/Multiple ledger section
→ Ledger creation window will appear
→ Fill all the information as required
→ Click on 'Yes' to save the Ledger account.
(3) Explain Voucher types in Tally.
Ans.
|
Voucher
Types |
Uses of
Voucher types |
|
F4 (Contra) |
• Cash
withdrawn from bank. Cash
deposited into bank. Fund transfer
from one bank/cash account to another bank/ cash account. |
|
F5 (Payment) |
• Payment
voucher records all the payment made through bank and cash. Cash purchase
transactions are also possible in this voucher type. Payment
voucher has two modes of journal entry. Single Entry Mode or Double Entry
Mode. |
|
F6 (Receipt) |
• Receipt
voucher records all receipt into bank accounts or cash accounts. Cash sale
transaction is possible. Receipt
voucher has two modes of journal entry, Single Entry Mode or Double Entry
Mode. |
|
F7 (Journal) |
• Journal
voucher is used for non-cash transactions. • Journal
voucher should not be used for credit sales and credit purchases. • Journal
Voucher is known for adjustment entry. It is used to adjust the debit and
credit amount without including the cash account or bank account. |
|
F8 (Sales) |
• Sales
voucher is used to record sales related transactions in a Company. • Sales
voucher is used for cash sales as well as credit sales. • This
voucher has two modes, "As Invoice" or "As Voucher". |
|
F9
(Purchases) |
• Purchase
voucher is used to record purchase related transaction in a company. • Purchase
voucher is also used for all credit purchase transactions. • This
voucher has two modes, "As Invoice" or "As Voucher |
Q.4 Differences between Manual Accounting Process and Computerized Accounting Process.
|
|
Basis of Difference |
Manual
Accounting process |
Computerized
Accounting process |
|
1 |
Meaning |
Manual
Accounting is a system of accounting that uses physical registers and account
books for keeping financial records. |
Computerized
Accounting is an accounting system that uses an accounting software for
recording financial transactions electronically. |
|
2 |
Calculation |
All the
calculations are performed manually. |
Only data
input is required, the calculations are performed by computer system. |
|
3 |
Recording
Storing |
Recording of
transactions is possible through book of original entry. |
Data content
or transactions are recorded in customized database. |
|
4 |
Adjusting
entries |
Adjusting
Journal entries and recording the entries in the ledger account will be done
manually one by one. |
Only
Adjusting Journal entries will be passed in the Computerized Accounting
system. The entries in the ledger account will be done automatically. No need
of making adjustment entries for errors and rectifications. |
|
5 |
Trial Balance |
In this
system of accounting, we have to prepare the balances of all ledger A/c in
Trial Balance statement when necessary. |
Computerized
Accounting system will produce Trial Balance automatically. |
|
6 |
Financial
Statement |
Preparation
of financial statements assumes the availability of trial balance. It is
prepared at the end of the period or quarter. |
Preparation
of financial statements is independent of producing the trial balance. It is
provided at the click of button. |
|
7 |
Speed |
Manual
Accounting system generates data much more slowly. |
Computerized
accounting systems are considerably quicker than manual accounting. It saves
considerable time when tallying results. Computer system can also generate
reports quickly. |
|
8 |
Accuracy of
data processing |
In manual
accounting there are more chances of errors due to inherent nature of human
error. |
In
computerized accounting there are less chances of processing errors. Error
will only occur if there is some error in programming in the accounting
software or applying a formula. |
|
9 |
Backup |
Not possible |
Entries of
transactions can be saved and backed up. |
|
10 |
Closing the
Books |
After the
year end, accountants prepare financial statements for the accounting period.
The balances are to be carried forward manually, to next year. |
In the
Computerized Accounting software financial reports are auto generated for the
accounting period. The balances are automatically carried forward to next
year |
3 Explain the Components of Computerized Accounting Software.
Ans.
Components of Computerized Accounting Software
The following components are used in Computerized Accounting Software: (a) Creation of accounting documents: Computer software helps in creating different accounting documents like cash memos, vouchers, receipts, invoices etc.
(b) Recording of Transactions: Computerized accounting software are used to record business transactions every day and every transactions will be given a unique code.
(c) Preparation of Trial Balance and Financial Statement: After recording the transactions the data is automatically transferred into ledger through the software. Vouchers are prepared on the basis of data recorded into the computer. Trading.
Profit & Loss Account and Balance Sheet is automatically prepared.
Sales
Ledger
Trading Profit & Loss Account
Recording of transaction in respective Voucher
Purchases
Trial Balance
Balance Sheet
Components of Computerized Accounting Software
6. What is Computerized Accounting system(CAS)? (March, 2022)
Ans.
Computers and Information Technology plays a phenomenal role in accounting processes which has revolutionized the modern business concepts. The process of decision making has become quick, accurate, timely and much easier. Computerized Accounting involves making use of computers and accounting software to record, store and analyse financial data. An accounting system is a collection of processes, procedures and controls designed to collect, record, classify and summarize financial data for interpretation and management decision-making.
Computerized Accounting System are software programs that are stored on a company's computer, network server or remotely accessed via the Internet. A Company or a firm prepares various reports and statements with the help of Computerized Accounting Software. The more complicated the financial activities of your business, you will need a computerized accounting system to ensure effective financial reporting. A computerized accounting system is an accounting information system that processes the financial transactions and events as per Generally Accepted Accounting Principles (GAAP) to produce reports as per user requirements.
7. Write the Steps to create a Company in Tally.
Ans.
Company Info menu
Double-click the Create Company option
Company Creation screen appears
Fill the Company information as required
Press Enter to save the Company Information
Click on 'Yes' to save
Company will be created.
8. Explain the basic components of Accounting System.
Ans.
There are five main components of an accounting system.
The five components are:
(a) Source documents
(b) Input devices
(e) Information processors
(d) Information storage
(e) Output devices.
(a) Source documents: Source documents are business documents that track business transactions. These documents are created as a written records for transactions to take place. Documents like invoices, purchase orders, and receipts are created at the end of a business event to keep a record of the original transaction.
(b) Input Devices: An input device is the component of an accounting system that captures information from source documents and transfers the data to information processors. Input devices like barcode scanners, keyboards, and modems, helps the user to enter the transaction information into the accounting system.
(c) Information processors: Information processors take the raw data from the input devices and post it to ledgers, journals, and reports. Processors, like computers and software programs process the data. An information processor is a part of an accounting system that interprets, converts, and summarizes financial data in the form of financial statements and reports.
(d) Information storage: Information storage is the component of the system that stores the reports and ledgers created by the information processors. Most modern accounting systems are computer based, so the storage devices usually consist of servers and hard drives.
(e) Output devices: Output devices like monitors, printers, and projectors are any devices that accept information from the system storage and display it in a useful way, so that it can be used by the end user.
INPUT (Data)
PROCESSING (Accounting Information)
OUTPUT (Reports)
STORAGE (Accounting Information)
Stages of Data Processing in Accounting System
9 Explain the importance of Computerized Accounting System. (Sept., 2021)
Ans.
Computerized accounting systems are very important for various types of business organizations, firms, company, etc.
(1) Automation: A Computerized Accounting System eliminates many complicated and time consuming manual processes. Many accounting software programs allows various reports to be generated at the touch of a button. All the calculations are automatically done by the accounting software with minimum time as compared to manual accounting calculations.
(2) Multi-user-facilities: The accounting information can be accessed by the businessman online or offline with more than one user controls outside or within the office. Multi-user-facility is helpful in online business as data can be accessed and entered by multiple users on different Computers at the same time.
(3) Accuracy: The Information and reports generated by the Computerized Accounting System software are accurate and quite reliable for decision-making as compared to human being. All calculations like addition, subtraction and statistical calculations are automatically done by the software are accurate as compared to manual accounting calculations.
(4) Speed to processed faster by using Computerized Accounting System as compared to manual accounting process. This is because Computerting Computer software require far less time than human beings in performing a task Computerized Accounting System provides user-definable templates ie. data entry screens or forms, for fast and accurate data entry of the transactions. It also helps in generalizing desired documents and reports.
(5) Reduction in Cost: Computerized Accounting work reduces the number of employees in an organization. As the financial records are to be entered only once in the system the accountant will save his time in maintaining the records. The volume of job handled with the help of computerized system results in economy and lower operating costs. The overall operating cost of this system is low as compared to the traditional system.
(6) Systematic and up to date records: In a computerized accounting system, the accounting records of the business organization are updated automatically as and when accounting data is entered and stored. Therefore, the latest information related to accounts get reflected when accounting reports are generated or produced.
(10) Explain Legal and Pirated Accounting Software.
Ans.
There are different types of accounting software packages and applications available in the market. User can select Legal and Open source software as per their business needs. Legal Accounting Software is fully functional and safe. Pirated Accounting Software is also fully functional, but its use is illegal and data can be corrupted.
(a) Legal Software: Legal software are licensed software, that the manufacturer has distributed themselves or through licensed agents, and users agree to use the licensed Legal software. Legal software are used by the companies for business purposes which is fully functional.
(b) Pirated Software: Pirated software, is software that is distributed illegally in violation of copyright law. Also known as cracked software which is available for free. Use of pirated software is risky considering data safety.
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