Computerized Financial Accounting - Methods and Practices - Use of software in Accounting
In a very short span of time, computer has grown from a scientific curiosity to an indispensable tool of modem society. There is hardly any scientific/technical or business activity which is not in one way or the other, affected by modern data processing techniques.
The human mind can handle only a limited number of things at a time. The digital computer, on the other hand, can be programmed to compare, measure, calculate and evaluate thousands of readings in an extremely short period of time.
The computer industry has become the fastest growing industry these days. The sale of mainframe computers is increasing day by day. The computer industry has been further pushed up by the introduction of mini computer and micro computers which are small, cheap, reliable and very light. These are being routinely used for process control, production testing, scientific instrument recording, in store check out systems, in automobile test and evaluating systems, and medical monitoring etc.
Computers are now being used extensively in office administration to perform the routine clerical work. Today, most large and medium sized organizations are almost totally dependent on their computers. Routine uses of computers are given below:
(i) Accounting, Billing, Inventory Control Software with MIS, CRM
Computers are extensively used in accounting and there are multitude of computer software for Accounting, MIS, CRM. HiTech Financial Accounting is one such software which has been customized for users in many segments in business and services.
(ii) Payroll and personnel records.
Payroll accounting was the first commercial area to become widely computerized. The calculation of wages or salaries involves a number of variables which relate to the personal details of each employee, such as gross pay or rate for the job, individual deductions, tax liabilities of the employees and so on. These facts can be retained in the computers and processed every month of produce pay slips for the employees.
(iii) Stock control
The computer helps to exercise the type of stock control needed by the organization. It upto dates the sales and purchases records, determines optimum re-order levels for different items and prints out the stock lists when desired. The system can be so designed that it triggers orders when stock level reaches order point for various material items; tests those item which are slow moving or gives list for over stock items.
(iv) Sale accounts records
Programming can be done for any sales accounting system. The computer will pin point defaulting debtors, determine the right limit for credit for each debtor and maintain stores ledger.
(v) Costing and budgetary control
Costing and budgetary control can be affected through the computer, the computer will point out the variations from the planned performance.
(v) Production control
The computer also helps greatly in production planning and control. It is possible that scheduling of the work may become necessary due to break downs etc. A new critical path may have to be worked out. A critical path is the shortest path to be followed in production to achieve production objectives. The computer helps the management lay down this new critical path. Advantages and disadvantages of a computer
A computer is surely advantageous because of the high speed of operation and greater accuracy it provides, savings effected by better managerial control, savings in labor because it is fully automatic and finally because of its flexibility in use. However, there is a considerable capital outlay with difficulty of obtaining experienced analysts and programmers, break down and maintenance troubles and finally fear of obsolescence due to rapid development of computers.
Type of other applications in relation to accounting system
It is a software package to help in text processing. Words are processed. Processing includes insertion, deletion changing, moving words, paragraphs etc. Word processing is the preparation of type scripts, using computing facilities for the storage and manipulation of text. For example, word processor has ability to merge name and addresses with standard text so as to give impression that the latter is personalized even in case of circular letter.
HiTech Financial Accounting has got features so that you can export its reports to Microsoft Word, a word processing and Mail Merge Program. You can also write letters to various parties and store the details in the program database.
It is simple collections of information (data) on a particular subject. Data base file allows you to manipulate the data in desired form. So, data base allows us to work on facts and figures to store and manipulate that data in any desired way. For example, from the same basic information trial balance is prepared; trading and profit and loss account may be prepared; list of debtors and creditors may be prepared; purchases and sales forecast may be made and so on. So, an efficient data-base management is needed to provide flexibility in uses of information. HiTech Financial Accounting uses MS Access and MS SQL server databases for robust database connectivity.
It is one of the software programs which have increased the utility of computer for accounting purposes. Spread sheet programs help you to draw vertical as well as horizontal columns on a large sized paper. Each .column's length and breadth can be adjusted according to suitability. Even when columns are once drawn subsequently these can be altered, increased or decreased additional columns can be inserted, existing columns can be deleted. It is very useful for businessmen and professionals. It enables us to study multidimensional data at one sheet and helps in arriving at logical decisions. For example, if profit and loss account has been prepared for the year 1989 and you want a comparison with 1987 figures and 1990 forecast then spread sheet shall enable you to provide two additional columns on each side for inserting 1987 actual figures and 1990 forecast estimates.
HiTech Financial Accounting software can export its report data to Microsoft Excel Worksheet which is an advanced spreadsheet application.
A series of articles are proposed to be written on the topics mentioned in this article.
Related Tags: accounts, inventory, financial accounting, accounting software, business accounting, computer accounting
The author is an engineering graduate, B.E.(Hons), and is managing his own software development firm Hitech Computer Services that mainly deals in accounting, billing and inventory control software for traders, industries, business houses, hotels, hospitals, medical stores, newspapers and magazines, petrol pumps, automobile dealers, commodity brokers and other business segments. The software are made both for intranet and internet. These software are available for free download from the website:
Evaluation version download is available at http://www.hitech-on-web.com/p10.asp
Copy of the article and full Financial Accounting Primer or Tutorial is available at http://www.hitech-on-web.com/Financial_Accounting_Primer.asp
Visit HiTech Computer Services at http://www.hitech-on-web.com/
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