Computers have completely revolutionized the way we conduct business. We use them today for all purposes, including accounting. In fact, they have been incredibly useful for accounting purposes. Let’s take a look at how computerised accounting systems make the process easier and quicker.
Computerised Accounting Systems
Computerised accounting systems basically mean software tools that we can employ for accounting purposes. In other words, they help in maintaining accounting records digitally. They even generate financial statements automatically using the data users feed into them.
Tally is a great example of a computerised accounting system. It is a popular software that accepts accounting information, generates financial statements, maintains records, etc. Similarly, billing machines like the ones found in malls are also good examples of digital accounting systems. They help in calculating billing amounts, reducing discounts, adding information of customers, etc.
Browse more Topics under Application Of Computers In Accounting
- Meaning and Elements of Computer System
- Components of a Computer System
- Capabilities of Computer System and Limitations of Computer Systems
- Management Information Systems and Accounting Information System
Evolution of Computerised Accounting Systems
Manual accounting was the most popular method of accounting until recent times. Businesses had to hire a full-time or part-time accountant or book-keeper for this purpose. They would manually record transactions, generate books and ledgers, and prepare financial statements. They had to do all accounting work manually on paper.
Accounting process later moved to computerised systems like billing machines. As we read above, these machines resembled typewriters and calculators and people used them in stores. They performed tasks like calculating net totals, deducting discounts, recording billing information, etc.
With the advent of newer technology, modern computerised systems made accounting easier. They enabled users to enter accounting data real-time. Apart from basic outcomes, these technological innovations helped record sophisticated transactions as well.
The most important innovation in this regard was the Transaction Processing System. Let’s take a look at it in detail.
Transaction Processing System (TPS)
The Transaction Processing System plays a huge role in recording and processing diverse business transactions. It basically records, corrects, validates, processes, stores and displays information. The business employing it can later retrieve this information and use it for various purposes.
The TPS performs its tasks using many steps and procedures. Some of these steps are as follows:
- Entry of data: Firstly, the user enters data into the system using input devices like keyboard, mouse, barcode scanner or interactive screen.
- Validation of data: Next, the system uses a set of programmes that compute and validate the data users enter in it.
- Processing of data: Once the system validates the data and checks its accuracy, it then processes it on the basis of the user’s commands.
- Storage of data: After processing data, the system stores it either in its short-term memory or the long-term one. This depends on the user’s command.
- Reporting of information: Finally, processed data is now called information, which is displayed to the user in pre-determined formats.
The Transaction Processing System also performs real-time accounting operations. Users can edit and use this data digitally using the internet. The reports generated by the system are stored and displayed in a language called Structured Query Language.
Features of Computerised Accounting Systems
Let’s take a look now at some basic features of these systems. A typical digital accounting system contains the following features:
- Data is inputted and stored online
- Accounts, transactions and records get unique codes for identification
- Users can print statements like bills and invoices
- Financial statements can be produced instantly and automatically
Solved Examples for You
Question: Fill in the blanks in the following statements.
- Accountants had to record transactions _____ before the invention of new systems.
- The most important innovation in computerised accounting systems is _____.
- _____ is a popular accounting software.
- Transaction Processing System