Nice Essay

INTRODUCTION:

How did computers come into being? What can they do? Are we able to use them in the Accounting field? Do they simplify all the Accounting work? What’s the outlook for computers in the future? These are the questions have been crossing my mind. The whole world is telling us that the computer simplifies everything. For Accounting students to become fully equipped to go out into the world of work, it is becoming necessary for them to understand how the ideas for the computer evolved over the years. It is important that they understand how much simpler it is today to do Accounting on a computer.

Accounting Information Systems (AISs) combine the study and practice of accounting with the design, implementation, and monitoring of information systems. Such systems use modern information technology resources together with traditional accounting controls and methods to provide users the financial information necessary to manage their organizations.

An accounting information system is the system of records a business keeps to maintain its accounting system.

An accounting information system is just a combination of accounting and computer. It makes accounting much more simpler to use and provides more detailed information or results in a professional manner at the end of accounting year. Today, there are specialised accounting softwares for the users to enter information, data and convert into an accounting format. It is useful for planning and making decisions for the future.Today, most business firms, companies, individuals now use computerised accounting using softwares such as spreadsheets, SAP, MYOB, etc.

ADVANTAGES OF USING THE COMPUTER IN ACCOUNTING

The most important advantage of using the computer is the speed with which we can get Accounting done. In addition, we find that it is very easy to do accounting functions. Posting to the ledger, a tedious task of double entry, when done directly from the general ledger module, can be largely automated when done through special purpose modules like accounts payable or accounts receivable. With an accounts receivable module, you just need to enter the actual cash totals of items purchased and the software distributes these amounts to the general ledger so they become credits to corresponding revenue accounts. At the same time, an offsetting entry is made automatically to the accounts receivable account.

With a computer, one can receive a balance sheet, income statement or other accounting reports at a moment’s notice. We also find that some day to day data entry can be turned over to relatively unskilled workers.

The main advantages of using a computer accounting program includes:

* speed - data entry on the computer with its formatted screens and built-in databases of customer and supplier details and stock records can be carried out far more quickly than any manual processing

* automatic document production - fast and accurate invoice and credit note printing, statement runs, payroll processing

* accuracy - there is less room for error as only one account entry is needed for each transaction

* availability of information - the data can be made available to different users at the same time balances (ex: customer accounts) will always be up-to-date

* up-to-date information - the accounting records are automatically updated and so account balances (ex: customer accounts) will always be up to date.

* legibility - the onscreen and printed data should always be legible and so as to avoid errors caused.

* efficiency - better use is made of resources and time; cash flow should improve through better debt collection.

* staff motivation - the system will require staff to be trained to use new skills, which can make them feel more valued.

USE OF COMPUTERS IN ACCOUNTING

With a computer, you can request and receive an in house balance sheet, an income statement, or other accounting reports at a moment’s notice. computers are great for handling complex home financial records. You can get statements on net worth and year’s tax deductible expenses within minutes and keep your financial data up to date and ensure minimal errors.

THE CASE FOR ADOPTION OF COMPUTERISED SYSTEMS:

The cost and benefits of adoption of computerised systems is immense.

The cost that goes into setting up the computerised systems are:

1) Hardware:

To adopt computerised systems, the costs involving hardware is a must as its hardware is a major component of computer systems.

2) Software:

Software is regarded as a major component in computers. The cost involved can be huge as one has to buy the right software according to their needs.

3) Training:

The use of computer requires the knowledge of skilled professionals. The cost involved in training the employees to use the computer and the software can be immense. There are two types of training involved.

a) Technical

b) Business process

4) Data conversion:

Collecting and compiling the data and information and converting it into professional format so that the user can glance at the data quickly and enable to grasp the information easily.

5) Interfaces and customisation:

Each firm, company or individuals have different needs. Hence the need for different platforms and customisations and tailoring the computer systems and software to ones needs.

6) Professional services:

Professional services are required to manage the computer systems and software as they have the required training and knowledge as well as experience.

7) Reassigned employees:

Many companies have adopted computerised systems, there is a need to re-train many employees so they can handle the work without any problems.

Software maintenance:

Maintaining the computers in working conditions and softwares can be expensive and tedious.

9) Software upgrades:

Most companies need to upgrade their computers and softwares regularly to remain up-to-date. Up-gradation can be expensive but it is a must for long term objective.

The benefits of adopting the computerised system are:

1) Reduced Inventory investment:

The companies need not make inventory purchases such as ledger books, accounting books, stationeries, etc. Hence the reduction in investment and its beneficial for companies that needs to save costs.

2) Improved asset management:

Computerised system helps improve asset management as one can keep track of various assets of a company with minimal or without errors and can be very efficient thus saving costs.

3) Improved decision making:

With the adoption of computerised system, one can grasp data and information quickly and at ease and make wise decisions which can be beneficial for the future plans.

4) Resolved data redundancy and integrity problems:

With the adoption of computerised system, there is an increased co-ordination and greater integration among various departments. Hence there is a greater efficiency and beneficial to the companies objectives.

5) Increased flexibility and responsiveness:

There is a greater flexibility and responsiveness after adopting computerised system as each department can work and co-ordinate seamlessly with minimal errors and can respond to problems quickly.

6) Improved customer service and satisfaction:

Having a computerised system in place, one can keep track of different customers and their needs and tailor the solutions accordingly. Hence there is a greater customer satisfaction.

7) Global supply chain and integration:

Adopting the computerised system can help the company keep track of the supply chain from any part of the world as computers are networked and this can create a platform for great integration of various departments and between firms and customers as well as suppliers thus saving huge amount of costs involved and improving efficiencies to a great extent.

CHAPTER SUMMARY

* Computer accounting systems save businesses time and money by automating many accounting processes, including the production of reports for management.

* Most computer accounting programs are based on the ledger system and integrate a number of different.

* The different functions can include: sales ledger, purchases ledger, nominal (general) ledger, cash and bank payments, stock control, invoicing, report production

* It is common for a payroll processing program to be linked to the nominal ledger of a computer accounting program.

* A business must consider carefully all the advantages and disadvantages of computer accounting before installing a computerised system. The main advantages are speed, accuracy, availability of up-to-date information; the main disadvantages are cost, security implications and possible opposition from employees.

Conclusion:

Adoption of computerised system is a complex undertaking and many of the undertakings sometimes have been unsuccessful. It is imperative that one should find out ‘what are the critical success factors that makes the adoption of computerised system successful’.

Hence it is important that one should make a careful consideration over adopting a computerised system in a firm and also plan it in such a way that the transition from manual accounting system to computerised accounting system is smooth and without any hitches.

Reference:

How computers have simplified accounting

By Carol L. Cook

Available from /www.yale.edu/ynhti/curriculum/units/1989/7/89.07.06.x.htm [Accessed 20/04/2006]

www.cems.uwe.ac.uk/~gwatkins/isdp2/04-05/lec8ie.doc

[Accessed 24/04/2006]

Weerd, I. (2005), WEM: A Design Method for CMSbased Web Implementations, institute of information and computing sciences, utrecht university, technical report

http://archive.cs.uu.nl/pub/RUU/CS/techreps/CS-2005/2005-043.pdf [Accessed 24/04/06]