Computerised Accounting System

Topics: Accountant, Accounting software, Bookkeeping Pages: 7 (1897 words) Published: March 27, 2012
This paper is based on a research project which will design to investigate business usage of acomputerized accounting system (CAS) to ascertain if there are obstacles that prevent businessesfrom migrating to such a system. Two groups of businesses will be surveyed. Those that currentlyuse a CAS and those that do not. The purpose of this comparison is to determine what will the major influences in their decision to use or not use accounting software for their business. A secondaryobjective was to learn more about the influence and role (if any) played by their accountant in their decision. The development of an understanding of the obstacles that inhibit the use of a CAS will beuseful in the building of strategies to encourage greater efficiency in business record keeping.

1. Introduction
The traditional view of business record keeping suggests that it is paper based and filedin a shoe box until such time that it is placed in the hands of the accountant for the preparation of the annualtaxation return. Over the years the accounting profession and business training providershave been trying to change the approach to record keeping adopted by small businessoperators, with a viewto them holding better records and ultimately improving the management of their business. With theintroduction of lower-cost and more user-friendly computerized accounting systems(CAS) thereappears to be fewer obstacles to improved record keeping practices. This paper willreport on the findings of a study that investigated business usage of CAS. It begins witha review of the literature onthe adoption of Information Technology (IT) and then considers the findings of the studyin thecontext of the adoption factors identified. It concludes with a discussion of the issuesthat areassociated with the usage of CAS and provides some direction for those organizationsinvolved in advising business operators about their record keeping.( 16th AnnualConference of Small Enterprise Association of Australia and New Zealand,28 September – 1 October 2003) -1-

1.1 Background of the study
The primary objectives of the accounting function in an organization are to processfinancial information and to prepare financial statements at the end of the accounting period. Companies must systematically process financial information and must havestaff who prepare financial statements on a monthly, quarterly, and/or annual basis. Tomeet these primary objectives, a series of steps is required.(Walter Henson,2006)A computerized accounting system saves a great deal of time and effort, considerablyreduces (if not eliminates

) mathematical errors, and allows for much more timelyinformation than does a manual system. In a real-time environment, accounts areaccessed and updated immediately to reflect activity, thus combining steps 2 and 3 asdiscussed in the preceding section. The need to test for equality of debits and creditsthrough trial balances is usually not required in a computerized system accounting sincemost systems test for equality of debit and credit amounts as they are entered. If someone were to attempt to input data containing an inequality, the system would notaccept the input. Since the computer is programmed to post amounts to the variousaccounts and calculate the new balances as new entries are made, the possibility of mathematical error is markedly reduced.(Ms.A. Indira,2007)Computers may also be programmed to record some adjustments automatically at theend of the period. Most software programs are also able to prepare the financialstatement once it has been determined the account balances are correct. The closing process at the end of the period can also be done automatically by the computer. Human judgment is still required to analyze the data for entry into the computer systemcorrectly. Additionally, the accountant’s knowledge and judgment are frequentlyrequired to determine the adjustments that are needed at the end of...
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