Account 6 Marks Question

1. Customised accounting software.

The term 'Customised Software' means making changes in the ready to use software so as to suit the specific requirements of the user. Any readymade software can be changed according to the needs and specifications of the user. However, the cost of installation of customised softwares are high because the cost of change is to be paid by the user.

2. Ready to use accounting software.

A variety of readymade softwares is available in the market. These softwares are for users at large and are not developed according to the requirements of any specific user. Most popular readymade softwares available in the market are Tally, Ex. Busy etc.

Despite many advantages offered by a computerised accounting system it is not free from limitations. Various limitations of a computerised accounting system are as follows:

1. Staff Opposition: Introduction of computers lead to a lot of retrenchrnent as well as complication of activities which result in resistance of the staff.
2. High Cost of Training: The sophisticated computerised accounting packages generally require specialised staff personnel, which leads to heavy amount of cost of training
3. Adverse effects on health: The excessive use of computers may lead to various health problems like eye strains, back aches, muscular pains etc.
4. Security Problems: Fraud and embezzlements are usually committed on a computerised accounting system through alteration of data. People responsible for tampering of data cannot be located in a computerised set up whereas the same can be easily done in case of manual records.
5. System Problems: System failure due to hardware failures, attack by viruses, system down etc. are the usual problems faced by a computerised system.

Ready-to-use: A variety of readymade softwares is available in the market. These softwares are for users at large and are not developed according to the requirements of any specific user. Most popular readymade softwares available in the market are Tally, Ex. Busy etc.
Customised: The term "Customised Software means making changes in the ready to use software so as to suit the specific requirements of the user. Any readymade software can be changed according to the needs and specifications of the user. However, the cost of installation of customised softwares are high because the cost of change is to be paid by the user.
Tailored: The term “tailor-made software means developing a software according to the needs and specifications of the user. These softwares are not available off-the-shelf.

computerised accounting system: A computerised accounting system is that accounting information system that helps in processing the financial transactions and event as per the Grenerally Accepted Accounting principles (GAAP) and leads to the generation of reports as per the requirements of the users.

	Basis of Distinction	Manual Accounting	Compurised Accounting
1.	Identifying financial transactions	In this system, identification of in financial transactions is done manually by applying the principles of accounting.	In this system also identification of financial transaction is done manually byapplying the principles of accounting.
2.	Recording	In this system, the recording of transactions in the books of original entryand related calculations such as adding subtraction and totalling are done manually.	In this system,the recording of transaction i.e., storing of data in database is done manually and all other calculations are done by computers.
3.	Classification	In this system, classification i.e. posting to ledger accounts and the preparation of trial balance is done manually.	In this, the stored data are processed automatically by the software to give us ledger accounts.
4.	Summarising	In this system, summarising i.e., balancing of ledger accounts and the prepration of trial balance is done manually.	In this, transactions once recorded are stored in the database which will produce trial balance automatically.
5.	Adjustment Entries	The identification. recording and posting of adjustment entries is done manually.	In the identification and recording of adjustment entries is done manually and thier posting etc. is done by software.

Yes, Computerised accounting system is the best form of accounting system Advantages of Computerised Accounting System:

1. High Speed: The accounting speed of a computer is much faster than that of a human being.
2. High Reliability: The extent of reliability of the information generated by a computer is immense. The reliability remains the same despite the volume of the work whereas the reliability of a human work can be doubtful in case of voluminous work.
3. Accuracy: The accuracy of a computer cannot be doubted once a particular program is fed. All the results based on such program would be 100% accurate whereas the results produced by a human being can vary due to fatigue, carelessness, etc.
4. Updation of Information: All the related records in a computer get automatically updated once any information is punched in, whereas in case of manual accounts all the records will have to be altered one by one.
5. Efficiency: The computer based accounting systems ensure better and efficient use of resources and time.
6. Legibility: The data displayed on a computer screen is clear and legible thus avoiding errors caused by untidy writing in a manual accounting system.
7. Lower Cost: The cost of maintaining accounts under the computerised system is much lower as compared to the manual system.

The following factors are usually taken into consideration before sourcing an accounting software:

1. The cost of installation and maintenance: The cost of installation and maintenance: A simple cost benefit analysis is done before installing any software. The cost of its aquisition, installation and maintenance are the factors of deep consideration before sourcing any software.
2. Flexibility: It is one of the important considerations before sourcing an accounting software. The software should be easily upgradable and must have the feature of easy modifications.
3. Adaptability and Training needs: Adaptabits and framing needs: The accounting software should be easily understandable and adaptable. It must not require extensive training.
4. Size of the orgnisation: The size of the organisation and the volume of its accounting transactions determine the requirements of the type of accounting software.
5. The Level of MIS reporting: Thilak u s reporting The level of use and utility of MIS reporting in an organisation determine the acquisition of software to a lot of extent.
6. Level of Secrecy: The level of secrecy should be high. It should be impossible for any unauthorised user to access the data.
7. Vendors Reputation and Capability: Another very important consideration to be made before sourcing any software is the various information about the vendor -- like since when the vendor is in the business of software development? Whether there are other users of the same software or not? What is the after sale service the vendor is offering and how quick is his service? etc.

Advantages: Advantages of Computerised Accounting A Computerised Accounting System has many advantages, as discussed below:

1. Large Volume of Transactions: In the present-day business environment, the transactions of a business are normally large in volume. The computerised accounting system can store and process such voluminous transactions with speed and accuracy.
2. Scalability: A computerised accounting system is scalable to handle the growing transactions.
3. Security: The accounting data under the computerised environment is safer than the accounting data under the manual system. The data can be kept secure by using a password, i.e., allowing only authorised users to access the data.
4. Timely Reporting: Availability of reports on time enables the management to take quick decisions, which is an important element for the success of an enterprise. A computerised accounting system makes these reports available as and when required.

Disadvantages: Disadvantages of Computerised Accounting However, computerised accounting suffers from the following disadvantages:

1. Controls: If adequate controls are not built and, where built, are not followed, it can lead to loss of data. It is important to take back-ups at regular intervals to avoid such a situation.
2. Data Corruption: The data can get corrupted through viruses that may come in through the internet or the use of external input devices without scanning them for viruses.
3. Trained Computer Operators: Untrained computer operators can lead to loss of data.
4. Limitations of Software: The software is developed on the basis of the experiences of the team of developers. As such, it may not be able to deal with a specific problem that may arise.

The computerised accounting system has various advantages over the manual system which are given below:

1. High Speed: The accounting speed of a computer is much faster than that of a human being.
2. High Reliability: The extent of reliability of the information generated by a computer is immense. The reliability remains the same despite the volume of the work whereas the reliability of a human work can be doubtful in case of voluminous work.
3. Accuracy: The accuracy of a computer cannot be doubted once a particular program is fed. All the results based on such program would be 100% accurate whereas the results produced by a human being can vary due to fatigue, carelessness, etc.
4. Updation of Information: All the related records in a computer get automatically updated once any information is punched in, whereas in case of manual accounts all the records will have to be altered one by one.
5. Effieciency: The computer based accounting systems ensure better and efficient use of resources and time.
6. Legibility: The data displayed on a computer screen is clear and legible thus avoiding errors caused by untidy writing in a manual accounting system.
7. Lower Cost: The cost of maintaining accounts under the computerised system is much lower as compared to the manual system.

1. ​​​​​​Ready to use accounting software.

A variety of readymade softwares is available in the market. These softwares are for users at large and are not developed according to the requirements of any specific user. Most popular ready made softwares available in the market are Tally, Ex. Busy etc.
Advantages:

1. These softwares are developed by a group of highly experienced group of professionals. Hence, they take care of the problems areas which may be overlooked if a particular software is developed for some specific user.
2. Since these softwares are used by a large number of users, accounting personnel well versed with these softwares are easily available.
3. They are easy to learn and their training is sometimes offered free by the vendor.
4. Because of their use by a large number of users, they have better after sales maintenance service.
5. Because they are available off-the-shelf, time required in developing a tailor made software is saved.
6. The cost of installation is low.

2. Customised accounting software.

The term 'Customised Software' means making changes in the ready to use software so as to suit the specific requirements of the user. Any readymade software can be changed according to the needs and specifications of the user. However, the cost of installation of customised softwares are high because the cost of change is to be paid by the user.
Advantages:

1. These softwares are designed to suit the specific requirements of the users. Hence, they are used by a large number of large and medium size business enterprises.
2. Level of secrecy for the data is higher.
3. Linkage to other information systems is available on the basis of need of the enterprise.
4. Tailored accounting software.

The term “tailor-made software means developing a software according to the needs and specifications of the user. These softwares are not available off-the-shelf.
Advantages:

1. It being developed according to the specifications of the user, takes care of the specific needs of the enterprise.
2. The level of secrecy of data and authenticity checks are robust in such softwares.
3. They can be effectively linked to some other information systems.