CHAPTER 14

Overview of Computerised
Accounting System
organisations running
Concept of Computerised These softwares are suited for volume
small/conventional business where the frequency or
Accounting System of transactions is very low. e.g.,
Tally, EX- Busy, etc.
AComputerised accounting system refers to a system
Advantages of readymade software are
wherein the accounts of the enterprise are maintained on a softwares is gernerally low
The cost of installation of these
Computer. It processesthe financial transactions and events and number of users is
limited.
as per Generally Accepted Accounting Principles (GAAP)to relatively easier to learn and
produce reports as per requirements of the user. " Ready-to-use software is very high.
framework of people (accountant) adaptability issometimes the vendoI
In acormputerised accounting system, the operating "The training needs are
simple and
storage and processing of data is called
(supplier of software) offers the training on the software
environment. Type of the accounting system used free.
determines the operating environment. It consists of ayailable off-the-shelf, time
hardware as well as software in which the
accounting system " As these softwares are software' is saved.
required in developing a 'tailor made number of users,
operates. softwares are used by alarge
are dependent on " As these
Both hardware and software componentsdepends on the type they have better after sales
service.
each other. Structure of the hardware dependent upon Limitations of readymade software are
hardware is
of software and selection of and the software is
various factors such as the
number of users,level of
The level of secrecy is relatively low
to data frauds.
secrecy, etc. prone
linking to other
computerised accounting system These softwaresoffer little scope of
The complexity of the organisation. Modern computerised information systems.
depends on the type of concept of database. softwares use laser printers which are
costly than
accounting systems are based on therelated information in an " These
Database is acollection of logically
easily accessed, managed and
dot matrix printers.
organised way so that it can be 2.Customised
implernented using a Database making changes in
updated. A database is The term 'customised software' means
Management System (DBMS). requirement of
the readymade software to suit the specific softwares are
Accounting System the user i.e., make it user specific. These
Types of Computerised of
available in respect to types
available off-the-shelf and are changed to suit the
There are a lot of options Basic features are mostly
requirements of the user.
cornputerised accounting systems.
following are the types of The developer, to meet specific user requirement,
can
common in all the systems. The modify all the readymade softwares. However, the user
computerised accounting system Customised
has to bear the cost of such changes.
1. Ready-to-use/Readymade user but software are best suited for large and mediumn
developed not for only specific users, it is businesses and can be linked to the other information
Thesesoftwares are Since, these are for general
general. of use systems.
for the uscrs in modules of such software are
the
not necessary that all this software.
buys
for every user who
 128 CUET (UG) Sectlon U:Domaln

Advantages of customised softwares are Requirements of

Computerised Accounting System
" Secrecy of data and software is high in customisced
system has two basic
software. Every computerised accounting
" Linkage toother information system is available on the requiremnents
basis of need of the enterprise. 1. Accounting Framework It consists ofa set of rules
transactions.
Limitations of customised softwares are principles followed for recording
" The cost of installation and maintenance is relatively high It refers to the procedure/
2. Operating Proceduretransactions
because the high cost is to be paid to the vendor for method of recording on a computer.
application has
customisation. The use of computers in any database oriented
below
mentioned
Since the need to train the software users is important, four basicrequirements as
between
the training costs are therefore high. 1. Front-end Database It is an interactive link
software through which
3. Tailored the user and database oriented database.
Theterm 'tailored software' refers to designing and the user COmmunicates to the back-end
developing user specific software. These softwares, being 2. Back-end Database It is the data storage system that
user specific, are not available off-the-shelf but are is hidden from the user and responds to the requirement
developed to meet the requirement of the user on the of the user to the extent the user is authorised to access.
basis of discussions between the user and developers. 3. Data Processing It is a sequence of actions that are
These softwares are suited for large business organisations taken to transform the data into decision useful
with multi-users and geographically scattered locations. information.
Advantages of tailored softwares are 4. Reporting System It is an integrated set of objects that
"The secrecy and authenticity checks are robust in such constitute the report.
softwares.
Structure/Elements of
Such softwares offer high flexibility in terms of number Computerised Accounting System
of users.
As these softwares are developed according to The computerised accounting system is such as system in
specification of the user, it takes care of the specific needs which all accounting activities are operated through computer.
The following items constitutes the structure of a
of the enterprise. computerised accounting system
These softwares can be effectively linked to some other
information system. 1.Hardware Computer hardware consists of physical
components such as keyboard, mouse, monitor and
Limitations of tailored softwares are processor. These components can be physically touched.
"These softwares require specialised training to the users. These are electronic and electromechanical components.
" The cost of maintenance and development of such The basiccomponents of the computer hardware are
softwares is much higher as compared to readymade and Motherboard
customised software. " Processor
" The results will be misleading, in case the accounts are " Primary storage memory
grouped in an incorrect manner. " Secondary storage devices
" Keyboard
Features of " Sound card and speakers
Computerised Accounting System "Monitor and Liquid Crystal Display Panel (LCD)
" Printers
Typically, computerised accounting system offers the
following features 2. Software It is the invisible part of the computer, wica
Online input and storage of accountingdata. is used with hardware to make computer pertorm
"Printout of purchase and sales invoices. operations. It is referred to set of instructions or
" Logical schemne for codification of accounts and prograns that enable the computer to perform its task or
transaçtions. Every account and transaction is assigned a commands given by the user.
unique'code. Software is held on the computer's hard disk, CD-ROM,
Grouping of accounts is done from the very beginning. DVD or on adiskette (floppy disk) and is loaded from
the disk into the computer's RAM (Random Access
Instant reports for management e.g., aging statement, Memory), as and when required.
stock statement, trial balance, trading and profit and loss Software can be divided into two major categories
account, balance sheet, stock valuation alue Added Tax " System software
(VAT), returns, payroll report, etc.
" Application softvware
 Accountancy 129

system Software It consists of several programs, which are softwares are

directly responsible for controlling, integrating and (ii) Specific Purpose Software These of
type
designed to perform specific tasks. Thispurposc
managing the individual hardware components of a to
computer system. System software also provides the application software generally has one
execute.
interface between the user and components of the computer. softvwares are
Depending on the tunctionality, the system software can be Some of the specific purpose application
described below
further divided into following categories and Purchasing
(i) Operating System It consists of programs which " Inventory Management System
control, coordinate and supervise the activities of System
various components of a computer system. Its " Payroll Managemnent System
function is to provide link between the computer " Hotel Management System
hardware and the user. It provides an environment " Reservation System
to run the programs. For example, MS-DOS, " Report Card Generator
Windows XP/2000/98, Unix, Linux, etc. the nost important
3. Humanware/People It constitutes refers to the
basically
The Operating system performs the following part of a computer system. It with the computer
functions individual or the users who interact
People who
" It recognises input from keyboard and sends output through the use of hardware or software.executing the
to the display screen. respond to the procedures instituted for
humanware/live
" It makes sure that programs running at the same Computer programs are also a part of
time do not interfere with each other. -ware.
people who design
" It isalso responsible for security and ensures that (i) System Analysts These are the
unauthorised users do not access the system. data processing systems.
people who write
(iü) Device Driver A software, which is written with (ii) Programmers These are the system
when it programs to implement the data processing
the objective of making a device functional driver. design.
called device
is connected to the comnputer is who participate in
like an interface (iü) Operators These are the people
It is a system software that acts operating the computers.
between the device and the user. or operations,
Every device, whether it is a printer,
monitor, mouse 4. Procedures A specified series of actions
manner, in order
program associated with it which have to be executed in a certain
or keyboard has a driver to always achieve the desired
result in same
for its proper functioning. circumstances is referred to as procedure.
helps in converting
(iiü) Language Translator It language. The There are three types of procedures which constitute part
programming language to machinecode. There are of computer system
translated program is called objecttranslator provides details
three different kinds of language (i) Hardware-oriented Procedure It operation.
Assembler, Compiler and Interpreter. about components and their method of
provides a set of
software designed (ii) Software-oriented Procedure It software of
Application Software It is a computer instructions required for using the
single or multiple tasks,It is a set
tohelp the user to perform designed for specific use or Computer system.
of instructions or programsuser to interact with a computer. (iüi) Internal Procedure It helps to ensure smooth flow
application, that enable the of data to computers by sequencing the operation of
called the end-user programs.
Application softwares are also for users. each sub-system of overall computer system.
real work entered
These programs do the 5. Data These are the facts which are gathered and
application software into a computer system. Data may comprise of numbers,
There are two types of Software These types of software
texts, graphics, etc.
(i)General Purpose people to
general purpose. They allow The comnputer system processes and organises data to
are used for any tasks.
do simple computer purpose softwares are as follows create information that is relevant and can be used for
Someof the general decision-making.
Software 6. Connectivity It is the sixth element of the computer
" Word Processing
" Electronic Spreadsheets system. It refers to the manner in which a particular
devices,
" Presentation Software computer system is connected to other electronic
microwave transmission,
Management System (DBMS) say through telephone lines,
"Database satellite link, etc.
(DTP)Software
" Desktop Publishing
" Graphics Software
 Practice Questions following items constitutes the
10 Which of the computerised accounting system?
1 Aomputerised accounting system processes the structure of a (b) Software
financial transactions and event as per (a) Hardware (d) None of these
(a) a1mnting standards and (b)
(c) Both (a)
(b) international nancial reporting standards is the basic component of the
(c) generally aoepted aovounting principles Which of the following
11 computer
() operating system of the computer hardware?
(a) Motherboard (b) Application software
Theframework of storage and processing of data is (d) All of these
called
(c)Operating system
of
(a) opersating envinnment 12 Software that are
meant to manage the resources
its operations are
() pressing envìonment acomputer and also facilitates
() storage envionment known as
(d) data environnment (a) operating system (b) utility program
(c) application software (d) All of these
consists of hardware as well as softwvare
(a) Operating system can be further classiñed 2s
(b) Computerised accounting system 13 Application software
software
(c) Motherboard (a) General purpose software
(d) Applieation software (b) Specific purpose
(c) General as well as specific purpose software
4Both hardware and software components are (d) None of the above
dependent on each other. State true or false. 14 Which softwares are designed and developed for
(a) True performing certain specific task such as payroll
(b) False
(c) Either true or false accounting?
(d) None of the above (a) Utility programmes
(b) Operating systems
5 Structure of the hardware depends on the type of (c) Application softwares
(a)hardware (d) Customise softwares
(b) motherboard
(c) operating system 15 Softwvare which is used to translate or interpret the
(d) software program is
(a) system software
6 Modern computerised accounting system is based (b)application software
on the concept of (c) language processor
(a)software (d) mìcroprocessor
(b) hardware
(c) database 16 Part of computer system which interact with the
(d) spreadsheets computer through the use of hardware or software
7Which of the following is/are the type(s) of is called.............
computerised accounting system? (a) language processor
(a) Ready to use (b) Customised (b) applications software
(e) Tailored (d) All of these (c) procedure
(d) humanware
means modifying the readymade 17 Which of the following is not a type of procedure
software tosuit the specific requirements of the
User which constitutes part of computer system?
(a) Operating system (a) Hardware oriented procedure
(b) Software oriented
(c) Internal procedure procedure
(b) Customised software
(c) Ready to use
(d) Tailored (d) External procedure
9 Which of the following is not a feature of 1o .....iS a specified series of actions or
computerised accounting system? operations, which have to be executed in a certain
(a) Online input and storage of accounting data manner, in order to achieve the desired result in
(b) Print out of purchase and sale invoices same circumstances.
(e) Grouping of accounts is done from the very beginning (a)Hardware (b) Procedure
(d) Hardware based only (b)Softwares (d) Humanwares
 Accountancy 131

are the facts which are every computerised

19
entered into a computer system. gathered and 22 Identify the requirement(s) of
(a) Data accounting system. Operating procedure
(b) Information (a) Accounting framework b)
(d) None of these
(c) Both (a) and (b)
(c) Knowledge database oriented
(d) Wisdom 23 Use of computers in any
application has........basic requirements.
20 refers to the manner in which a (a) two (b) three
(d) None of these
particular computer system is connected to other (c) four
electronic devices, say through telephone lines. of objects that
(a) Communication
24 ..... is an integrated set
constitute the report. (b)Back-end database
(b) Connectivity (a) Front-end interface
(c) Information (c) Data processing (d) Reporting system
(d) Data between the user
25 ..... ..... is an interactive link through which user
21 Name the software used for controlling internal and database oriented software
database.
functions, such as reading data input devices. communicates to the back-end
(a) System software (a) Front-end database
(b) Application software (b) Data processing
(c) Connectivity software (c) Reporting system
(d) None of the above (d) None of the above

ANSWERS
9 (d) 10. (c)
6. (c) 7. (d) 8. (b)
2 (a) 3 (b) 4. (a) 5 (d) 19. (a) 20. (b)
1. (c) 16. (d) 17. (d) 18. (b)
14. (c) 15. (c)
11. (a) 12. (a) 13. (c)
23. (C) 24. (d) 25. (a)
21. (a) 22. (c)
 CHAPTER15

Using Computerised
Accounting System
Installation of 5. Generating Reports This is the final stage of
automation. Under this stage, final reports are prepared
Computerised
In
Accounting System (CAS) in the form of journal, cash book, ledger, trial
balance,
modern business, accounting transactions are processed profit and loss account and balance sheet. Preparing
through computers. An accounting system has two aspects, reports is acomplex process and discussed ahead.
i.e. it has to work under aset of well-defined accounting
concepts and principles and it has to maintain records and Charts of Accounts
generate reports as defined by the user. An important component of CAS is that the accounts should
These aspects can be fulfilled by processing the transactions be appropriately grouped in the manner that all accounts of
and eventsin accordance with the accounting principles and one nature are classified under one broad head of account
adopting the software which is capable of generating the user and appropriately grouped as asset, liability, etc.
defined reports. The process of performingthe accounting
function with the help of accounting software can be said to Accounts groups are maintained todetermine the hierarchy
be as automation of accounting process. This process of ledger accounts which is helpful in determining and
includes presenting meaningful and compliant reports.
following steps in the installation of CAS The group behaviour is classified into capital or revenue and
1. Planning Under this stage, assessment of size of entity
and volume of business transactions is done for which more specifically into assets, liabilities, income and
automation has to be made.
expenditure.
2. Selection of Accounting Software It involves
For example, the accounts are to be grouped on the basis of
their nature e.g.., salary, wages and staff welfare expenses are
selection of apprOpriate accounting software. The choice
is based upon certain factors like the requirements of grouped as employee costs.
organisation, the size of organisation, security concerns The groups ascertain whether the same willaffect profit and
access from remote locations, etc. loss account which is revenue in nature or balance sheet
3. Selection of Accounting which is capital in nature.Groups can be sub-classified to
Hardware This stage practically unlimited levels. But at the lowest level would be
involves choosing the desired computer hardware the ledger account.
compatible with the accounting software. The hardware
such as Hard Disk Drive or RAM should be adequate to Codification and Hierarchy of Account Heads
support theaccounting software. Also the operating
system should be compatible with the software. When the size of an organisation increases, the number of
accounts heads will also increase. It becomes important to
4, Classification and Grouping of Accounts This stage have proper classification of data and toprovide special code
involves preparing a comprehensive list of accounts to various heads of accounts.Codification means providing
which are to be opened during the year. These ldentification mark tothe various heads of accounts. There is
accounting heads are givern an accounting code on the a hierarchicalrelationship between the groups of accounts
basis of which the transactions are posted to the
and its components. Proper codification isrequired in order to
designated account head in the ledger. The trial balance maintain the hierarchical relationships between a group and
is generated automatically alongwith profit and loss its sub-groups.
account and balance sheet. The creation of accounts
group and hierarchy is initiated before entering A code, which may be numerical or alphanumeric, is
transactions in the system. allocated to each account and arranges the accounts in logical
subdivisions. The example below will elaborate it better.
 Accoutancy 133

Establishment expenses or payroll expenses' is the main Sub Heads

wod while its sub-divisions or sub-accounts are Major Heads
. Salaries and Wages Foued Assets
. Staff Welfare Assets
. E.S.I. Contridution Currert AsSets

Provident Fund Contribution Capital

n the chart accounts or grouping, it will be allocated -cTEnt Liabites
acounting codes as follows Liabilities
Grouping
ACouning Code Head of Account
and Current Liablties
Hierarchy
101 + Establishment Expenses or of
|Accounts Sales
Payroll Expenses Revenue

3011 + Salaries and Wages Other Ircorne

1012 Staff Welfare Direct Expenses

Expenses
1013 + Provident Fund ContriDution
Indirect Expenses
1014 +ESIContribution

Preparation of Charts of Accounts code to each main head, sub-heads

process of preparing Chart of Accounts' or Grouping of Accounts' begins with giving a item belonging to assets,
The the main head signifies whether the account is an
and thereafter, individual account heads. Code of account head will appear.
signifies the head under which individual
liabilities, expenses or incomes. Code of sub-head accounts for assets.
accurately, let us take an example of preparing chart of
In order to underStand the process more curent assets. The chart of accounts for
assets into fixed assets, investments and
ABC Ltd. Company broadly classifies its
Assets of ABC Ltd. shall be as follows Account Head
Account Code Main Head Sub-head
Main Code. Sub-code
’Assets
+Fixed Assets
Land
001
+ Building
002
Plant
003
>Machinery
O04
’ Furnitre
005
> Investments
2 Quotd Shares
O01
Unquoted
O02 Shares
Quoted
003 Debentrues
Unquoted
004 Debentrues
-Current Assets
3
Stock
O01
Debtors
002
Advance
003
Casin Hand
O04
134 CUET Sectton l:Domaln
goods sold by the
thisvoucher, all thecredit.
6. Sales Voucher In
In the given example, code for land account will be l1001. In both cash and
business are recorded,
the given codification, it has been considered that ABC Ltd.
is a single unit enterprise. If the enterprise has more than Data Validation
one unit, a code may be given for the unit also. computerised accounting system like tally, data validation
In platform level or at TDL level.
can be done at two levels, at
Transaction Processing System (TPS) language of the tally which is
It is an information processing system for business TDL is the development power to the users of the
designed to provide flexibility and
transactions involving the collection, modification and validation at TDL level as it does
software. TDL can only add
retrieval of alltransaction data. It is a computerised system level validation. Following
that performs and records the daily routine transactions not have any control over platform
validation
which are necessary to conduct the business. are some of the TDL Level
Validate This attribute checks
1. Field Level Attribute :
TPS serves the organisation at the operational level. or not. The user cannot
if the given condition is satisfied for validate is
Characteristics of a TPS include performance, reliability and move further unless the
condition
consistency. Cash withdrawal at an ATM is one the most satisfied.
common example of TPS. TPS involves folowing steps in attribute takes a
processing a transaction 2. Field Level Attribute: Unique This field must be
logical value. The values inserted in the
1. Data Collection It refers to the collection of data. unique if the attribute is set to yes.
2. Data Editing It refers to checking data for 3. Field Level Attribute : Notify This
attribute is similar
CoIrectness.
to Validate', The difference being, this attribute
flashes a
3. Data Validation It refers to verifying data for any warning and the cursor moves to the respective
field.
errors and rectifying those errors.
4. Data Manipulation It refers to processing and Data Verification
analysing data on a pre-set design. Computer accounting systems also provide the facility of data
example, tally comes with the facility of data
5. Data Storage It refers to the processing of stored data verification. For in conducting various internal
in the database. analysis report which helps
analysis and verification of financial data of the company and
6. Report Generation It refers to generating reports in also helps in identification of areas which helps in easing the
hard copy or soft copy in a pre-designed format. verification process.
7. Query Support It refers to the process whereby the The various tools available for data analysis are
user of TPS can raise a query and extract the data to
" Verification of charts of accounts
get report.
Verification of stock items
So, it can be concluded that simple computerised accounting
system accepts the complete transaction data as input; stores Verification of balances
the data and retrieves the data for processing as and when " Analytical Procedure
required for generating an accounting report as output. "Displaying the pending documents
Data Entry "Displaying the repeated transactions
In accounting sense, it is a process of
recording financial " Inter bank transactions
transactions, i.e. money coming into and going out of the " Analysis of fixed assets
bu_iness. There are lot of predefined vouchers in
" Displaying the lowest and highest value transactions
Computerised Accounting System. For example, tally has 23
entered. " Reports on pending advances
predefined vouchers where data can be
The following are some of the vouchers Preparation of Financial Statements
inflows of
1. Receipt Voucher Through this voucher, all Preparation of financial statements incude preparation of
money are recorded. profit and loss account and balance sheet. These are as follows
voucher, all
2. Payment Voucher With the help of this 1. Profit and Loss Account
outflows of money are recorded. It is an account which provides the net result of the operations
2 Contra Voucher In this voucher, only trânstero tungs of the business for a specified period of time. In computeriseu
between cash and bank account is recorded. accounting system like tally, the information of this account 15
AJounal Voucher This voucher is used to record all the automatically updated immediately when atransaction is
business.
non-cash transactions of the recorded.
the
5. Purchase Voucher This voucher records all In tally, to viewthe profit and loss account, go to GateYay
purchases of goods made by the business, in cash or in Tally> Profit & Loss Account.
Credit.
 Accountancy 135

In order to do that, they have to pass the closing entries.

Closingentrics are thoseentries that are passes at the endof
KTH Ss Aceot
theaccountíng period in order to transfer balances to a
23AA.8)Det oes
n0eechg oeck
permanent account from a temporary account. The closing
21.,0 balances of the previous year becomes the opening balances
of the current year. On the basis of opening balances, opening
LAARD0AAs aec tacome
entries arc passed.
In computerised accounting. there is year-end processing to
Create and store opening balances of accounts in database.
Adjusting Entries
Adjusting entries are those entries that are recorded at the
end of the year to update the balances of all the accounts as
per accrual basis.
In computerised accounting, journal vouchers are prepared
and stored to follow the principle of cost matching revenue.
03160efetel
lete

2.BalanceSheet but there is nothing like passing adjusting entries for errors
information regarding the and rectification, except for rectifying an error of principle by
itis a statement which provides having recorded a vwrong voucher such as using payment
prepared as per the
financial position ofa company. It is voucher for a receipt transaction.
Schedule II of the Indian Companies Act, 2013.
to Gateway of Tally>
In tally, to view the Balance sheet, go Security of CAS
Balance Sheet. companies as the
Data leakage is quite common in large
nupee)
might be provided to various
AUC Compemy (1151h access of company's data important for the
Tenisei616
stakeholders. Thus, it is extremely
Computerised
companies to use the security features of
Accounting System.
features generally available in
Here are some of the security
CAS
system facilitates defining the
9076 231A

1. Password Security Thedepartment in which he is

user rights according to vouchers can be
aLes working. For example, purchase purchnase
accessed by only those persons working in
department.
provides data about what
2. Data Audit This feature onginal data and who made
changes are made in the
those changes.
provides security ike
Opening and Closing Entries
required to close 3. Data Vault This feature
A the end of every year, the businesses are encryption of data.
their books of accounts.

Practice Questions
should be ........inthe
installation 3 In CAS, the accounts
1What is the correct sequence of steps in manner that all accounts of one nature are
of cornputerised accounting system? scCount.
classified under one broad head of
í) Selection of accounting software (a) separated (b) grouped
(i1) Planning (d) None of thèse
(ii) Generating reports (c) Either (a) or (b)
fiv) Selection of accounting hard ware have a proper lassiicaian t
(r) Classification and grouping of accounta 4 Which tool is used tospecialcode to various htads of
(a) (ii), G, (iv), (v), (ii) (b) (i), (i), (Gii), (iv), (v) data and to provide
(d) (ii), (iv), (i), (v), (ii) accounts?
Ie) (v), (iv), (ii), (ii), (6) (a) Accounting Software
(b)Codifñcation
2 Which of the follgwing is an accounting software? (c) Gateway of Tally
(a) Tally (b) Microsoft Office (d) Microsoft Ofice
lc) Photoshop (d) Notepad
136 CUET (UG) Sectlon H: Domaln
validation at
level can add
18 TDL (b) TDL levelonly
... means providing identification mark to the platform levelonly (d) None of these
(a) (a) and(b)
various heads of account. (c) Both analysis are
(a) ldentification tool (b) Heads of accounts Tools available for data accountg
(c) Codification (d) None of these 19 verification ofchart of
(b) displaying the lowest and highest value transactions
(a)
6 The relationship between the groups of accounts and (b)
(d) None of these
and its components is (c) Both (a)
(a) vertical (6) horizontal recorded at the end of the year to
that are
(c) diagonal (d) hierarchical 20 Entries balances of all the accounts as per
update the
7 Proper codification is required in order to maintain accrual basis.
(a) Opening entry (b) Journal entry
the hierarchical relationship between d) Rectification entry
(a) humans and computers (c) Adjusting entry
(b) operating systenm and application softwares provides the net result of the
(c) groups and its sub groups (d) journal and ledger 21 Which account period of
operations of the business for a specified
8 Which of the following is not a subhead of assets? time?
(a) Fixed assets (b) Current assets Cash flow statement
(a) Profit and loss account (b)
(c) Capital (d) Allof these (d) Balance sheet
(c) Fund flow statement
9 Which of the following is a subhead of liabilities? 22 To view the profit and loss account,
we have to go ta
(a) Non-current liabilities (b) Short-term liabilities Account
(c) Both (a) and (b) (a) None of these (a) Gateway of Tally > Accounts > Profit and Lossand Loss
b) Gateway of Tally > Final Accounts > Profit
10 Which of the following is a subhead of revenue? Account
Account
(a) Other incomes (b) Salary paid (c) Gateway of Tally > Profit and Loss
(c) Direct expenses (d) Current assets (d) None of the above
11 Identify the step(s) that TPS involves in processing 23 Balance sheet is a statement with provides
a transaction from the following. information regarding the
(a) Data collection (b) Data storage (a) net result of the operations of the business
(c) Query support (d) All of these (b) financial position of a company
12 How many predefined vouchers does tally has? (c) inflow and outflow of cash
(a) 21 (b) 22 (c) 23 (d) 24 (d) acquisition and utilisation of funds
13 Through which voucher, all inflows of money are 24 The balance sheet is prepared as per the
recorded? (a) Schedule I (b) Schedule II
(b) Payment voucher (c) Schedule III (d) Schedule 1V
(a) Beceived voucher
(c) Contra voucher (d) Journal voucher 25 The ...of theprevious year becomes the
14 With the help of . voucher, all outflowsof of the current year
money are recorded. (a) closing balance, opening balance
(a) received (b) payment (c) contra (d) journal (6) opening balance, closing balance
(c) Either (a) or (b)
15 With the help of this voucher, only transfer of fund (d) Neither (a) nor (b)
between cash and bank account is recorded.
26 Why closing entries are passed?
Identify the vouche. (a) To update the balances of all the accounts as per
(a) Received voucher (b) Payment accrual basis
(c) Contra voucher (d) Journal
(b) To transfer balance of a temporary account to
16 voucher is used to record all the non-cash permanent account
transactions of the business. (c) To close journal entries (d) None of these
(a) Received (b) Payment (c) Contra (d) Journal 27 Which system provides data about what changes
17 In this voucher all the good sold by the business is are made in the original data and who made thos
recorded both cash and credit.
() Purchase voucher
changes?
(a) Password security
(a) Received voucher (b) Data audit
(c) Contra voucher (d) Sale voucher (c) Data security
(d) Data leakage
ANSWERS
1. (a) 2 (a) 3 (b) 4. (b) 5. (c) 6. (d) 7. (c) (a
(c) 9 (c) 10.
11. (d) 12 (C) 13. (a) 14. (b) 15. (c) 16. (d)
17. (d) 18. (b) 19. (c) 20. (c)
22.. (c) 23. (b) 24. (c) 25. (A) 26. (b)
21. (a) 27. (b)
CHAPTER 16

Accounting Using Database

Management System
índes
Concept of Database 3, Forms In the ontezt of databasc, a fofIn is a
which consists of various fields arnd spaces to filf the data.
Management System It is a databasebject used to create uer
interface ot
Databasce Management System (DBMS) is asoftwarc database asplications.
system used to storc, retrieve and run queries on data, It 4. Reports A repIt ís the result of a databae query
serves as an interíace between an end user and a prescnted in aforrnatted rmannet It contaíns seful
database, allowing users to create, read, update and inforrmatíon whích helps ín decísion-fhaking, Most of
the
delete data in the database,
applícatíions corne with built-in reportingtools. For
DBMS manages the data, the database engine and the defined
czarmple aírlínes software rnay contain specifically
database schema, allowing for data to be manípulated or reports Gn frequent travelers in business
class.
extracted by users and other prograrms. This helps in
providing data security, data integrity, concurrency and Creating DataTables for Accounting
uniform data administration procedures. ComputerisedaccOunting involves identification, storing and
by following a
It optimises the organisation of datacalled extracting the data related to the transactíon of accountíng.
which display a
database scherma design technique
normalisatíon, Data tables are used in database applícations
when any of table carn be created
which splitsa large table into smaller tables range of outputs given arange of ínputs. A
itsatuributes have redundancy in valucs. It offers many using design view, wizardor entering data.
systerns, íncludíng flexibility TABLE' is used, which is
benefits over traditional file To create a table, the keyword 'CREATE
Examples of DBMS
and a morecomplex backup system. Server and followed by auníque narne or identífier.
incdude licensed packages like ORACLE, SQL Following steps can guide on how to create an
Excel data table
PostgreSQL, etc.
open source packages like MySQL, Step 1 Create a model
Objects in DBMS Step 2 Línk the output
structure which is used to Step 3 Enter the input values
Adatabase object is a data purp0se, There are data tables furnction
either store the data, or for referencing Step 4 Highlight the cells and access the
Sorne objects in DBMS as follows Step 5 Link the ínput values
data, which is stored Step 6 Forrmat the data table output
I. Table A table is a collection of
the records in rows
in atabular forn. It represents
sec aIIcaningfu! Use of Queries, Forms and
and columns so that the user can
and formatted data. Each
column in the table forms
Reports to Generate Accounting Information
the
the related set of information of
an objcct. Queries The accountíng informatíon whích is presented in
of inforrnation from form of accounting report can be gernerated by creating arnd
2. Queries A query is the request
a collection of data. In DBMS, querY
means request executing some qucries under database management system.
executed
ofdata or information by the user from a database. For gencratíng thc ínforrnation required, a query is
Database consists of alot of data stored in the form which cormmunicates to access the accounting data. For a
of tables. In order to extract a
specific data or completc view of datawhich is stored across various tables,
information, the user needs to run a query in the queries based on SQL are needed to be executed. A Query
database. This can be perforined with the help
of a generatesthe records that contain fields from various data
database query language like S0L. tables.
 138 CUET (UG) Section il :Domain
ofDBMSinInformation
GeneratingAccounting
Application
Forms Thcy are used toeasily view, enter and change data
It acts as a container of
directly in a table. When you open a form, MS Access ofrecord keeping. define, store, retrieve and update.
retrieves the data from one or more tables and displays it on DBMS is a system user can
which a
the screen, in a layout youchoose. Aform ismade up of data from defining, storing, retrieving and
controls which are used to facilitate the entry of information usefulfor
DBMSis also
updating accountingdata.
into the table that the form represents. To facilitate casicer like data storage management,
datacntry, forms are often designed with several special
performs many functions, security management,
features. It
data dictionary
management, backup
effective
Reports A report is an effective way to present the data in a management, etc. that ensures the
printed format. Since you have control over the size and and recovery system.
running of accounting accounting
appearance of everything on a report, youcan display the generating and retrievingcustomers'
information the way you want to see it. Most of the DBMSalso helps in reports,
records,sales
information in a report comes from an underlying table, datalike shareholders' employees´ profile, petty
query or SQL statement, which is the source of report's data.
profile,suppliers' profiles, payroll,
Other information in the report is stored in the report design. cash register, etc.

Practice Questions
in a
is a collection of data which is stored
1 What is the full form of DBMS?
tabular form.
(a) Database management security (a) Rows
() Table
(b) Database management system (d) Object
(c) Database marketing system (c) Reports
(d) Database monitory system is the request of information from a
is the group of data which is interlinked collection of data.
(b) Object
and set of programs which helps in accessing the (a) Table
data (c) Query (d) Column
(a) ABMS (b) CBMS
10 Database consists of a lot of data stored in the form of
(c) DBMS (d) EBMS (a) table (b) object
3The main objective of DBMS is to (c) query (d) reports
(a) retrieve stored data 11 In order to extract a specific data or information,
(b) collection of data the user needs to run a in the database.
(c) smooth functioning of systems (a) command (b) query
(d) All of the above (c) bios (d) interference
4 For which of the following sectors, DBMS will be
useful? 12 Which of the following is oneof the query language
in DBMS?
(a) Universities
(b) Manufacturing (a) SQL (b) Microsoft Office
(c) Human resources (c) Language translator (d) None of these
(d) Allof the above 13 ... is a window which consist of various fields
5 A........... is a database structure which is used to and spaces to fill the data.
either store the data or for referencing purpose (a) Query (b) Table
(a) data (b) information (c) SQL (d) Form
(c) object (d) knowledge 14 Which database object is used to
create user
6Which of the following is the most common interface for database application?
database object? (a) Table (b) Object
(a) Table (b) Column (c) Form (d) Report
(c) Row (d) None of these 15 is the result of a database query presented
7 Data in table is recorded in .... and in a formatted
manner.
so that the user can see a meaningful and (a) Table
(b) Object
formatted data (c) Report (d) Form
(a) upward and downward 16 Object that contain usual
(b) horizontal and vertical in information which helps
(c) diagonal and vertical
(d) rows and columns
decision-making
(a) report
is known as
(b) form
(c) object
(d) table
 Accountancy 139

11 Data tables can display 22 For a complete view of data which is stored acrogs
(a) input various tables, the user is required to
(b) output (a) execute queries based on SQL
(c) output given a range of input (b) search for data tables in DBMS
(d) None of the above (c) Either (a) or (b)
(d) Neither (a) nor (b)
18 Which keyword is used to create a table?
(a) Create table (b) Table 23 acts as a contaíner of data from whicha
(c) Open table (d) New table user can define, store, retrieve and update.
(a) Accounting information
19 The keyword to ereate a table is followed by (b) DBMS
(a) serial number (b) employee code (c) Management information system
(c) date (d) unique name (d) None of the above
20 Accounting information can be generated by 24 Which of the following is not a function of database
(a) executing somne queries management system?
(b) searching it online (a) Data storage management
(c) Either (a) or (b) (b) Data dictionary management
(d) None of the above (c) Recording accounting data
21 MS Access is a (d) Recovery management
can be
(a) customised software 25 Wich of the following accounting information
(b) relational DBMS retrieved using DBMS?
(c) operating system (a) Shareholders record (b)Customers' profile
(d) All of the above (c) Petty cash register (d) All of these

ANSWERS
8. (b) 9 (c) 10. (a)
5. (C) 6 (a) 7. (d)
2 (c) 3. (a) 4 (d) 19. (d) 20. (a)
1. (b) 16. (a) 17. (c) 18. (a)
13. (d) 14. (c) 15. (c)
11. (b) 12. (a)
23. (b) 24. (c) 25. (d)
21. (b) 22. (a)
 CHAPTER 17

Accounting Applications of
Electronic Spreadsheet
generated using electronic
Some of the items that can be
Concept of Electronic Spreadsheet spreadsheets are
It is a tabular representation of any statistical, mathematical, the loss in the value of
scientific or accounting data. It is a software tool that lets one 1. Depreciation Schedule It lists
There are various
enter, calculate, manipulate and analyse set of numbers. the asset over a period of time. straight line
methods to calculate depreciation like
Different
It is a large sheet in which data and information is arranged method or written down value method.
in rows and columns.There are various spreadsheet formulas can be used to calculate depreciation
programs available, like Microsoft Excel, Google Sheets, Libra depending upon the method of depreciation.
Office Calc, Lotus 123, etc. the
(i) Straight Line Method In this method,
These spreadsheets are also known as worksheets. They also amount of depreciation remains fixed over the life
provide the functions of mathematical formulas. They can of the asset. The amount of depreciation can be find
also recalculate the results when there is a change in source out by using the following syntax
data. SLN (COst, salvage, life)
Here are some of the basic elements of electronic (iü) Written Down Value Method In this method,
spreadsheets are as follows depreciation is charged on the diminishing balance
" Workbook and worksheet of the asset, and the value of asset does not remain
" Rows, columns and cells same. The amount of depreciation can be find out
by using the following syntax
Features of Electronic Spreadsheet DB (COSt, salvage, life, period)
" It is easy to learn and does not require any special training. 2. Loan Repayment Schedule This schedule helps in
" Mathematical calculations can be done with built-in knowing the amount that needed to be paid back
programs.
through a series of periodic payments, which includes
principal amount and interest. The amount can be find
" Data is presented in tables which minimises manual work out with PMT formula, where is PMT (incude rate, nper,
and increases accuracy. py, fv). Here, pv = present value: fv= future value, and
" Information can also be provided in the form of charts and
nper = number of payment period for an investment.
graphics. 3. Payroll Accounting A payroll is a list of emnployees
" It can easily sort data in ascending and descending order. working in an organisation and receiving payments and
" Password can be added to workbook which increases the other work related benefits. Payroll can be created with
Security of the data. the help of electronic spreadsheets as it is easy to
maintain in electronic form rather than manually.
Application of Electronic
In order to create payroll in
Spreadsheet in Generating Accounting Information spreadsheet, we have to
Electronicspreadsheet plays an important role in recording create some columns with headings that can hold the
value of some variables.
and generating accounting data. It can be used to find out The
the profit or loss of the business. Spreadsheets can also be hierarchy of columns can be set as
used to prepare various accounts and statements like balance " Employee Name Pay Rate
" Total Hours Worked
sheet. Overtimne
" Gross Pay
Itcan b¹ used in various other areas like payment tracking, Income Tax
" Other Deductions
loan repayment schedules, payroll, etc. Net Pay
PracticeQuestlons
A aheet in which data and
information
4n rowaand columneiscalled
is arranged 10 Which of the following appications can be used to
(n) paper aheet prepare various accounts and statements like
balance sheet?
(b) notebook (a) Adobe reader
(e) apreadaheet (b) Flectronicspreadsheet
(d) All of the nbove (c) Microsoft word
Which of the following is a type of electronic (d) None of the above
wpreadsheet? 11 What are the other areas in which an electronic
(a) MicroBoft Bxce) spreadsheet can be used?
(b) Google aheeta (a) Payment tracking
(c) Lotus 129 (b) Losn repayment schedules
(d) All of the above (c) Payroll
(d) All of the above
8 Spreadsheets are also known as
(a)workshects (b) paper sheet 12 The schedule which lists the loss in the vaiue of the
(c) notebook (d) All of these asset over a period of time is known as
(a) depreciation schedule
4 Mathenmatical formulas are provided in (b) payment tracking schedule
(a) eloctronic spreadsheets (c) loan requirement schedule
(b)paper sheets (d) none of the above
(c) notebooks
(d) None of the above 13 Different formulas can be used to calculate
depreciation depending upon
5 What happens when there is a change in source (a) system
data of an electronic spreadsheet? (b) humanware
(a)The results needs to be recalculated manually (c) method of depreciation (d) All of these
(b) It can recalculate the result automatically 14 In which method, the amount of depreciation
(c) Either (a) or (b) asset?
remains fixed over the life of the
(d) Neither (a) nor (b)
(a) Written down value method
spreadsheets
6 The basic elerments of an electronic (b) Straight line method
include (c) Either (a) or (b)
(d) Neither (a) nor (b)
(8) workbook and worksheets
(b) rows, columng and cells the amount of
15 The syntax used to calculate method is
(c) Both (a) and (b) depreciation using straight line
(d) None of the above (a) OCM (b)SLN
the features of electronic (d) DEP
7 Which of the following are (c) SLMD
spreadeheets? which method, depreciation is charged on the
require any special 16 In
(a) Easy tolearn and does not diminishing balance of the asset?
training
in tables (a) Written down value method
(b) Data is not presented províded in the form of charts (b) Straight line method
(c) lnformation can be (c) Either (a) or (b)
and graphe (d)Neither (a) nor (b)
(d) Both (a) and (c) method, the value of the
17 In written down value
8 Bpreadsheets can also be used to asset
accounting information
(a)generate (a) remnain same
(b) video editíng (b) does not remain same
the business
(c) electronic mail (c) depending up on the type of
(d) All of the aboVe (d) Either (a) or (b)
can be used to find out
the profit caleulate the amount of
3 Which application 18 The syntax used to written down value method is
or loss of the buBÍTLeBs? depreciation using (b) DBM
(a) Adobe render (a) WDV
(b) MicrOoft, word (d) DB
(c) DEP
(c) Electronic #preudsheet
(d) Nons of the bove
142 CUET (UG Séction il: Domain

is a list of
23 Aorganisation
...
employees working in an
19 Which schedule helps in knowing the amount that and receiving payments and other
needed to be paid back through a series of periodic work related benefits.
payments?
(a)payment tracking
(a) Payment tracking (b) Payroll accounting (b) payroll accounting
(c) Depreciation schedule (d) None of these (c) depreciation schedule
20 Periodic payment includes (d) None of the above
(a) principal amount only (b) interest amount only
(c) Both (a) and (b) (d) None of these 24 In the given syntax, (rate, nper, pv, fv) nper means
(a) number of years
21 The syntax used to calculate the amount of periodic (b) principal amount
payments is (c) interest rate
(a) PPA (b) PMT (d) number of payment period for an investment
(c) PMA (d) PMO
25 Payroll is easy to maintain in
22 In the given syntax, (rate, nper, pv, fv) pv stands for (a) manually system
(a) post value (b) past value (b) electronic form
(c) present value (d) pre volume (c) virtually
(d) All of the above

ANSWERS
1. (c) 2. (d) 3. (a) 4. (a) 5. (b) 6. (c) 7. (d) 8. (a) 9. (c) 10. (b)
11. (d) 12. (a) 13. (c) 14. (b) 15. (b) 16. (a) 17. (b) 18. (d) 19. (d) 20. (c)
21. (b) 22. (c) .23. (b) 24. (d) 25. (b)