Computer Application in Accounting

Computer Application in Accounting

Computer Application in Accounting is technological know-how and its utilization has registered an enormous improvement during the closing three decades. Historically, computer systems have been used efficiently in science and science to remedy complicated computational and logical problems. They have additionally been used for completing financial planning and forecasting processes.

Recently, modern-day day computers have made their presence felt within the enterprise and industry. The most essential influence of computer systems has been on how facts are saved and processed inside an organization.

Although guide facts processing for Management Information Systems (MIS) has been pretty common in the past, contemporary MIS would be almost not possible barring the use of laptop systems. In this chapter, we shall mention the want for the utilization of computer systems in accounting, the character of computer applications in accounting records machines, and therefore the sorts of accounting associated with MIS reviews.

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Meaning and Elements of Computer Systems in Computer Application in Accounting

A computer is a digital device, which is capable of performing a range of operations as directed by a set of instructions. This set of guidelines is called a laptop program. A computer machine is a combination of six elements in Computer application in accounting:

• • Hardware:

The hardware of the computer consists of bodily components such as a keyboard, mouse, display, and processor. These are digital and electromechanical components.

• • Software:

A set(s) of programs, which is used to work with such hardware is called its software. A coded set of guidelines saved in the shape of circuits is called firmware. There are six sorts of software programs as follows:

1. Operating System:

A built-in set of specialized programs that are supposed to manipulate the sources of a laptop and additionally facilitate its operation is referred to as a working system. It creates a quintessential interface that is an interactive link, between the person and the computer hardware.

2. Utility Programmes:

These are a set of computer programs, which are designed to function positively assisting operations: such as a program to format a disk, duplicate a disk, and physically reorganize saved facts and programs.

3. Application Software:

These are user-oriented programs designed and developed for performing certain specified tasks: such as payroll accounting, inventory accounting, financial accounting, etc.

4. Language Processors:

This is the software, which checks for language syntax and eventually translates (or interprets) the source program (that is a program written in a computer language) into machine language (that is the language that the computer understands). 

5. System Software:

These are a set of programs that control such internal functions as reading data from input devices, transmitting processed data to output devices, and also checking the system to ensure that its components are functioning properly.

6. Connectivity Software:-

These are a set of programs that create and control a connection between a computer and a server so that the computer can communicate and share the resources of the server and other connected computers.

• People:

People interacting with the computer application in accounting systems are additionally known as liveware of the computer system. They represent the most essential section of the laptop machine :

• • System Analysts are the people who design data processing systems.
  • Programmers are the people who write programs to implement the data processing system design.
  • Operators are the people who participate in operating computers. People who respond to the procedures instituted for executing computer programs are also a part of live-ware.

• Procedures:

The processing capability is a sequence of operations in a positive order or manner to achieve preferred results. There are three sorts of processes that constitute part of the computer system: hardware-oriented, software-oriented and internal procedure. Hardware–oriented systems furnish small print about components and their approach of operation.

The software-oriented method gives a set of directions required for the usage of the software program of the computer system. The internal procedure is instituted to make certain clean drift of statistics to computer systems by sequencing the operation of every sub-system of a basic computer system.

• Data:

These are facts and may consist of numbers, text, etc. These are gathered and entered into a computer application in the accounting system. The computer system in turn stores retrieves, classifies, organizes, and synthesizes the data to produce information according to a pre-determined set of instructions. The data is, therefore, processed and organized to create information that is relevant and can be used for decision-making.

• Connectivity:

It is acknowledged as a sixth element of the computer system. How a particular computer system is connected to others say through telephone lines, microwave transmission, satellite links, etc. is the element of connectivity.

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Capabilities of Computer Systems in Computer Application in Accounting

A computer system possesses some characteristics, which, in comparison to human beings, turn out to be its capabilities. These are as follows ;

I) Speed:

It refers to the number of times a computer takes to accomplish a task or complete an operation. Computers require far less time than citizenry to perform a task. Normally, citizenry takes under consideration a second or minute because of the unit of time. But computers have such a quick performance capability that the relevant unit of your time may be a fraction of a second.

Most modern computers are capable of performing 100 million calculations per second and that is why the industry has developed Million Instructions per Second (MIPS) as the criterion to classify different computers according to speed.

II) Accuracy:

It refers to the degree of exactness with which computations are made and operations are performed. One might spend years detecting errors in computer calculations or updating incorrect records. Most of the errors in Computer-Based Information systems (CBIS) occur because of bad programming, erroneous data, and deviation from procedures.

These errors are caused by human beings. Errors due to hardware are normally detected and corrected by the PC system itself. Computers rarely commit errors and perform all kinds of complex operations accurately.

III) Reliability:

It refers to the power with which the computers remain functional to serve the user. Computer systems are well-adapted to performing repetitive operations. They are immune to tiredness, boredom, or fatigue. Therefore, they are more reliable than human beings. Yet there are often failures of the PC system thanks to internal and external reasons.

Any failure of the PC during a highly automated industry is unacceptable. Therefore, businesses in such situations provide a backup facility to swiftly take over operations without loss of time.

IV) Versatility:

It refers to the ability of computers to perform a variety of tasks: simple as well as complex. Computers are usually versatile unless designed for a specific application. A general-purpose computer is capable of being used in any area of application: business, industry, scientific, statistical, technological, communications, and so on.

A general-purpose computer, when installed in an organization, can take over the jobs of several specialists because of its versatility. computer systems when installed can take over the jobs of all these specialists because of are highly versatile. This further ensures fuller utilization of its capability.

V) Storage:

It refers to the quantity of knowledge a computing system can store and access. Computer systems, besides having instant access to data, have an enormous capacity to store such data in a very small physical space. A CD-ROM with 4.7” of diameter is capable of storing an outsized number of books, each containing thousands of pages and yet leaving enough space for storing more such material.

A typical mainframe system is capable of storing and providing online billions of characters and thousands of graphic images. It is clear from the above discussion that computer capabilities outperform human capabilities. As a result, a computer, when used properly, will improve the efficiency of an organization.

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Limitations of a Computer System in Computer Application in Accounting

Despite possessing all the above capabilities, computers suffer from the following limitations :

• Lack of Commonsense:

Computer systems as of date do not possess any common sense because no fool-proof algorithm has been designed to program common sense. Since computers work according to stored program (s), they simply lack common sense.

• Zero IQ:

Computers are dumb devices with zero Intelligence Quotient (IQ). They cannot visualize and think about what exactly to do in a particular situation unless they have been programmed to tackle that situation. Computers must be directed to perform every action, however, the minute it may be.

• Lack of Decision-making:

Decision-making may be a complex process involving information, knowledge, intelligence, wisdom, and therefore the ability to gauge. Computers cannot make decisions on their own because they do not possess all the essentials of decision-making. They can be programmed to make such decisions, which are purely procedure-oriented. If a computer has not been programmed for a particular decision situation, it will not decide due to a lack of wisdom and evaluating faculties. Human beings, on the other hand, possess this world power of decision-making.

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