Essay on Computerized Accounting System PDF

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The essay is on a computerized accounting system and its importance in a contemporary business organization. In the ever-changing business world, where the competition is rising exponentially, the entire organizations are trying to use more efficient functional processes to achieve sustainable compe...

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Essay on Computerized Accounting System

Table of Contents 1.0Introduction............................................................................................................................................2 2.0 Main body.............................................................................................................................................2 (a) Computerized accounting system assistance towards business..............................................................2 i.

Positive impacts that computerized accounting system brings to the business.................................2

ii.

Accountants benefit from the engagement of a computerized accounting system...........................3

(b) Controls that are being used in the accounting system and their benefits...............................................4 (c) Main contributions of the payroll system and the pros and cons of the inventory and billing system....5 3.0 Conclusion.............................................................................................................................................6 References...................................................................................................................................................7

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1.0Introduction The essay is on a computerized accounting system and its importance in a contemporary business organization. In the ever-changing business world, where the competition is rising exponentially, the entire organizations are trying to use more efficient functional processes to achieve sustainable competitive advantages. The computerized accounting system supports obtaining an automated accounting system. This system is very fast and rate of accuracy measured is much higher in comparison to the manual system of accounting. This system is consisting of positive impacts on the business organization as it helps in delivering fast as well as accurate financial information to the management. The accountants are also benefitted from the computerized accounting system. Some controlling measures are used in this system of accounting is to manage the system efficiently so that maximum outcomes can be obtained from it. The enhancement of this system is leading to the development of efficiency in the payroll system and has significant impacts on billing and inventory system[ CITATION top18 \l 16393 ].

2.0 Main body

(a) Computerized accounting system assistance towards business i.

Positive impacts that computerized accounting system brings to the business

The computerized system of accounting has a substantial level of positive impacts on the business organization. It has significant advantages as it helps in providing fast accounting services, unlike the manual accounting system. Besides this, it is almost error-free so it helps in obtaining more genuine accounting information in comparison to the manual system of accounting. Many accounting professionals complain that manual system of accounting is often monotonous and boring as they have to perform long calculations. In the case of the computerized system of accounting, there is no such type of complaint. Most of all, the accountants need not be expert as most of the procedures are already programmed with the system. Hence, with little accounting knowledge, an individual can manage the accounting tasks with the help of this system[ CITATION Jac18 \l 1033 ]. In this context, the business owners and top management staff, who have not adequate accounting knowledge, can also check the Page | 2

accounts easily with computerized system. The management can obtain the necessary accounting and financial information more easily with a computerized accounting system. Hence, management decision-making processes are stimulated and become more efficient. The computerized accounting system not just helps in obtaining accounting information quickly but it also supports getting the complex report to reinforce management decisions. The business documents like purchase orders, invoices, salary slips, etc. can be produced more rapidly with computerized system. Apart from this, several accounting reports are updated automatically as well as available instantly with the help of this system. As the computerized system helps the management in getting necessary accounting and financial information more quickly, hence it supports in making better management decisions. In these ways, this system has brought important optimistic impacts on business organization[ CITATION Mou15 \l 1033 ]. ii.

Accountants benefit from the engagement of a computerized accounting system

The accountants are significantly benefitted by the engagement of a computerized system of accounting. The system supports accountants to store as well as access the financial data more quickly and efficiently. The accountants can make the necessary changes very quickly to provide essential financial reports to the management. It alleviates the requirement of keeping the paper files, which are often terrifying to the accountants. The computer has huge storage capacity and the information on the computer can be gathered instantly. It also supports the accountants to get the necessary financial and accounting information more quickly. As the computerized accounting system is very fast, thus it saves the time of the accountants, hence they get adequate leisure time. The business transactions can be entered into the system quickly. Moreover, the computer system uses to post the transactions accordingly. The bookkeepers or accountants can be able to process more accounting information as quickly as possible by using the formulas as well as can verify the computed totals and hence it leads to minimizing errors[ CITATION Mor18 \l 1033 ]. The computerized accounting systems are generally customized by the specific industry and thus allow the bookkeepers and accountants to use the existing templates for the general ledger entry. It supports the business organization in staying organized. While the accounting or financial information is entered into the computer system it supports obtaining the information more easily. It supports the accountants to store huge accounting information within the system and Page | 3

they can be accessed very quickly at the time of requirements, unlike paper files. The reporting is becoming easier by the uses of this system so that accountants can deliver the necessary reports promptly to the management.

(b) Controls that are being used in the accounting system and their benefits For the control of the accounting system, an internal control system is being attributed that monitors, measures and directs the resources of the organization in regards to accounting and auditing. The five most important components of this internal control system in account maintenance are risk assessment, communication and information gathering, monitoring and controlling of the environment and some of the specified activities. At the managerial level, the internal control's objectives recount the consistency of monetary reporting, timely criticism on the accomplishment of outfitted or some tactical goals. Along with this, another attribute is acquiescence with laws and policies. This internal control usually involves identifying cases in which robbery or some kind of loss could take place and determine if the presented control events efficiently supervise the risk to a satisfactory level. The evaluation of internal controls are made and changed to build a big business procedure to run further successfully and effectively. For example, the automation of some controls that are physical in nature can accumulate costs and perk up processing the transactions for dealing out. The board of the administrators in an organization provides immense guidance to the management for the holding of the internal controls as they are the working knowledge of the organization. Improvements that could be done in regards to this accounting attribution towards business is segregating the accounting duties, restricting access to the financial system and increasing the oversight the small businesses generally depend on A bookkeeper or on one worker to ensure that all aspects of the accounting system are well maintained. The processing of cash recipients and the processing of the payments should segregate within two different people. This will decrease the happenings of fraud. It is also prudent to alternate persons executing the activities for the aforementioned activities occasionally. The access restriction to the financial system will remove the probability of a person creating fake entries and casing up their tracks [ CITATION sig18 \l 1033 ]. An internal control without oversight is not a fine adequate thing. A suitable assessment

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of the statements of banking, payments and checking registers and executing the banking reconciliation processes frequently should be done to improve the internal controlling.

(c) Main contributions of the payroll system and the pros and cons of the inventory and billing system The main contributions of the payroll system in the business are firstly taking care that the employees are getting their salary in a systematic manner and within time. Secondly maintaining statutory compliance, that is maintaining a proper labor law code of conduct for payroll adherence. Thirdly, managing the information of all employees effectively and fourthly, as all the attributes in the payroll system are automated so it is time-saving in nature. The payroll apart from all this can evidently generate few reports regarding the worker's attendance and salary structure in an effective manner as it runs on the cloud. This payroll contributes hugely for the startups as in many cases for the new startups the payrolls are free and one can operate through it in an effective manner[ CITATION San19 \l 1033 ]. The advantages of the inventory system are mainly it is cost-saving along with this it saves time too. This system maintains data on a real-time basis and also its security by increasing the efficiency of the business. The system optimizes the resources in regards to the wholesalers, distributors, and retailers. In regards to some kind of damage or obsolescence, the inventory system proves to be a boon in minimizing the loss of the stock. The use of the inventory system profoundly helps the business from economic fluctuations by saving on to the expenditures. The inventory system helps in the optimization of the inventories at a greater rate by maintaining an adequate amount of stocks. The disadvantages of the inventory system are that it is too expensive and every business cannot afford it. Along with this, the system is a bit complex in nature too and sometimes can be lengthy. This system does not completely resolve all kinds of risks that are related to business. That is there is a limitation in the elimination of the business risk through this inventory system software[ CITATION Chi18 \l 1033 ]. The first and foremost advantage of the billing system is that it is a form of mode that is paperless. This is environmental friendly indeed. This is an electronic system and thus helps the sender and the receiver at a greater pace. This system is less expensive and that why it can be afforded by several businesses. The billing done through this mode is completely free of any Page | 5

kind of hassle and one can profoundly defend the bill by password protection process. The system is user-friendly and greatly beneficial for the bill generators. This saves time than the traditional billing system and the loss in the bill is also being reduced through this system. Most of the systems of billing are outsourced from online process. The outsourcing of these billing results in the generation of some kind of fees through which one can easily use the billing system. This is one of the advantages of this system. The securitization and safety is another negative side of this system. As this is an online system so hacking is a very common aspect. The downtime of the internet also creates some of the major hindrances in electronic billing[ CITATION sus18 \l 1033 ].

3.0 Conclusion The computerized accounting system is a very eminent kind of system in the new era and it has some of the controlling units that help the business management in a fruitful manner. In this paper, some of the aspects of the computerized accounting system are being discussed with some examples to get a proper view of the points. The role of the accountants in regards to this accounting system is also being broadly discussed with some latest development in this trend. The internal control system is also being explained wholly. Lastly, the paper discussed the contributions of the payroll system which is one of the efficient tools in this accounting system along with the advantages of the inventory and the billing system. It is also equally playing a great role in maintaining accounts for a business.

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References Lohrey, J. (2018). What Are the Negative & Positive Impacts of Computerizing an Accounting Department?

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accounting-4910.html Shenoy, S. (2019). Here's how a good payroll management system can benefit your startup in the long run. Retrieved from yourstory.com: https://yourstory.com/2019/06/employee-payrollmanagement-system-startup Shiraj, M. M. (2015). THE IMPACT OF USING COMPUTERIZED ACCOUNTING SYSTEMS (CAS) IN FINANCIAL REPORTING AMONG SMES: SPECIAL REFERENCE TO THE SOUTH EASTERN

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http://www.seu.ac.lk/researchandpublications/symposium/5th/abstract/businessandmanagement/ 16.pdf signatureanalytics. (2018). 5 Ways to Improve Internal Accounting Controls and Oversight in Your Business. Retrieved from signatureanalytics.com: https://signatureanalytics.com/5-ways-toimprove-internal-controls-and-oversight-in-your-business/ sushindiawriters. (2018). The Advantages And Disadvantages Of Electronic Billing. Retrieved from sushindiawriters.wordpress.com: https://sushindiawriters.wordpress.com/2012/12/24/theadvantages-and-disadvantages-of-electronic-billing/

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toppr. (2018). Concept of Computerized Accounting System . Retrieved from toppr.com: https://www.toppr.com/guides/accountancy/computerised-accounting-system/concept-ofcomputerized-accounting-system/

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