SUBMITTED TO – MRS.

KRITI MAM
SUBMITTED BY – KIRTI KHATRI
ROLL NUMBER - 24BBAN1096
BRANCH-BBA
SECTION-K
SEM-IST
SUBJECT – AFM

1 Define computerised accounting system.

Explain its features
And. Computerized Accounting System:

A computerized accounting system (CAS) is a

method of recording, managing, and processing
financial data using accounting software. It
replaces manual accounting systems with a more
efficient, accurate, and automated process to
handle transactions, maintain ledgers, prepare
financial reports, and ensure data integrity.
Popular accounting software packages include
Tally, QuickBooks, SAP, and Xero, among others.
Features of a Computerized Accounting System:

1. Automation:
• Data entry is required only once, and the
system automates repetitive tasks such as
journal entries, ledgers, and trial balance
creation. It saves time and reduces the
chances of errors that can occur with manual
accounting.
2. Accuracy:
• The computerized system calculates figures
automatically, ensuring higher accuracy
compared to manual accounting. Errors like
calculation mistakes are minimized.
3. Speed:
• A CAS can process large volumes of
transactions quickly. It generates financial
statements and reports almost instantly,
reducing the time required for complex
financial analysis.
4. Real-time Reporting:
• Financial information can be accessed and
reports can be generated in real-time,
providing businesses with up-to-date data on
their financial status.
5. Data Security:
• Computerized systems often include features
like password protection, encryption, and
secure backups to safeguard financial data
from unauthorized access, theft, or loss.
6. Scalability:
• A CAS is scalable, meaning it can grow with
the business. Whether managing a small
business or a large corporation, the system
can handle increasing transactions and
complexity with minimal adjustments.
7. Integration:
• Modern accounting software can integrate
with other business systems, such as
inventory management, payroll, and customer
relationship management (CRM). This ensures
smooth data flow between departments and
reduces redundant data entry.
8. Reduced Paperwork:
• Since transactions are recorded digitally, the
need for physical paperwork is significantly
reduced. This leads to a more organized and
clutter-free office environment.
9. Customizable Reports:
• A computerized system allows for the
generation of customizable reports that can
 cater to specific management needs. Reports
like profit and loss statements, balance sheets,
and cash flow statements can be tailored as
per the user’s requirements.
10. Compliance and Standardization:
• CAS ensures that all accounting records
adhere to relevant legal standards and
accounting principles. It also facilitates easy
tax compliance by generating tax-related
reports, invoices, and statements according to
the law.

Conclusion:

A computerized accounting system significantly

enhances the efficiency, accuracy, and speed of
financial operations in any business. With its
advanced features, businesses can manage their
finances more effectively, make informed
decisions, and ensure compliance with
accounting standards and tax laws.

2. Differentiate between computerised

accounting and manual accounting.
And. Difference Between Computerized
Accounting and Manual Accounting:
Basis Manual Computerized
Accounting Accounting
1. Method of Transactions are Transactions are
Recording recorded manually recorded
using books and electronically
ledgers. using accounting
software.

2. Speed Slower, as entries Much faster due to

and calculations automated data
are done manually. entry and
calculation
processes.

3. Accuracy Prone to human Highly accurate as

error, such as the system
calculation or performs
posting mistakes. calculations
automatically.

4. Data Storage Physical storage is Data is stored

required for books, digitally in
ledgers, and files. databases,
reducing paper
usage.

5. Report Reports (e.g., trial Reports are

Generation balance, P&L) are generated
prepared manually, automatically and
taking time. instantly.

6. Security Physical records Data is protected

are vulnerable to through
damage, theft, or encryption,
loss. passwords, and
backups.
7. Cost Cheaper initially, Higher setup costs
as no software or due to the need for
hardware is software and
required. computers, but
 lower long-term
costs.

8. Time Time-consuming, Saves time by

Consumption as tasks like automating
balancing ledgers repetitive tasks.
are done manually.
9. Backup & Difficult to Easy to create
Recovery maintain backups digital backups
of physical and recover data if
records. needed.

10. Audit Trail Tracing errors and Provides a clear

tracking changes audit trail, with
is more difficult. details of all
changes and
transactions.

3. Explain the merits and limitations of

computerised accounting.
And. Merits of Computerized Accounting:

1. Speed and Efficiency:

• Transactions and financial data are recorded
and processed quickly, allowing for faster
decision-making. Automated calculations reduce
the time spent on manual tasks like data entry
and report generation.
2. Accuracy:
• Since most calculations are done automatically,
there is minimal room for human error. This
ensures that financial statements are precise and
reliable.
3. Real-time Financial Information:
• Computerized systems provide real-time access
to financial data, enabling businesses to track
their performance and financial status instantly.
This is crucial for making timely business
decisions.
4. Automation of Repetitive Tasks:
• Functions such as posting journal entries,
preparing trial balances, and generating financial
statements are automated. This reduces
workload and frees up time for more strategic
activities.
5. Data Security:
• Financial data in computerized accounting
systems is secured with passwords, encryption,
and access controls. Regular backups and cloud
storage options add an extra layer of protection
against data loss or theft.
6. Cost-Effective in the Long Run:
• Although initial setup costs can be high,
computerized accounting systems can reduce the
need for manual labor, stationery, and storage
space. This can lead to substantial long-term
savings.
 7. Easy Access and Sharing:
• Multiple users can access the system from
different locations (especially with cloud-based
accounting systems). This improves collaboration
between departments and remote teams.
8. Integration with Other Systems:
• Computerized accounting can integrate with
other business systems, such as inventory
management, payroll, and CRM software, creating
a seamless flow of information across different
parts of the business.
9. Compliance and Legal Support:
• Modern accounting systems automatically
update to comply with changing tax laws,
accounting standards, and regulations. This
ensures that businesses remain compliant
without needing to constantly update their
processes manually.
10. Customizable Reports:
• Reports like balance sheets, income statements,
and cash flow statements can be generated in a
format that suits the business’s needs, providing
management with relevant and detailed financial
insights.

Limitations of Computerized Accounting:

1. High Initial Setup Costs:
• The cost of acquiring software, hardware, and
training employees can be expensive, especially
for small businesses. This includes software
licenses, IT support, and data migration.
2. Dependence on Technology:
• A computerized system depends on technology
and the internet. In cases of hardware failure,
system crashes, or cyberattacks, there is a risk of
data loss or delays in accessing financial
information.
3. Security Risks:
• While digital systems offer security features,
they are vulnerable to cyber threats such as
hacking, viruses, or malware. Businesses must
invest in strong cybersecurity measures to
protect their financial data.
4. Technical Knowledge Required:
• Employees need to be trained to use the system
efficiently. This requires time, effort, and
resources. Lack of technical knowledge can lead
to errors in using the system and delays in work.
5. Software Updates and Maintenance:
• Accounting software requires regular updates to
ensure compatibility with new features, legal
requirements, or security patches. Businesses
need to keep up with updates to avoid
performance issues.
6. Loss of Data due to Technical Issues:
• In the event of a system malfunction, crash, or
power failure, there’s a risk of losing valuable
financial data unless regular backups are
maintained.
7. Customization Complexity:
• While accounting software can be customized to
an extent, businesses may find it difficult or
expensive to fully tailor the software to their
specific needs without the help of specialists.
8. Limited Flexibility:
• In some cases, computerized accounting
software may not easily accommodate unique or
complex transactions that don’t follow standard
formats, leading to workarounds or additional
customization costs.
9. System Dependency:
• Over-reliance on computerized systems can
result in decreased manual accounting skills
among employees, making it difficult to handle
situations that require manual intervention.
 10. Security Threats from Insiders:
• Even with strong external cybersecurity,
internal threats (such as unauthorized access by
employees) can lead to data theft or fraud if
access controls and monitoring systems are not
properly managed.

4. Name and explain in brief about some of

the popular Computerised Accounting
Systems. Mention about their merits and
demerits.
Ans. Different Accounting Software Systems
Xero Accounting Software
If you’re looking for an accounting software that
will help your business work more efficiently,
look no further than Xero. With the single unified
ledger and automatic bank feeds, it’s designed to
keep businesses running smoothly without
requiring frequent data input from users. You can
even create custom invoices with a few clicks of
the mouse or swipe on mobile devices! It also
includes a host of other features such as fixed
asset register, business and management
reporting, purchase orders, expense claims
, accounts payable & receivable and many more.
Pros of Using Xero
 Unlimited Users
Large App Marketplace and open API
Accessible and user-friendly mobile app
Extremely Easy to use and fantastic user
interface
Good speed and reliability
Has all the features a regular business needs
and all accountants need
Caters for a large number of industries
Support quick response
Large base of self support articles and videos
available
Cons of Using Xero
A bit more expensive than the other software
providers (Still worth it)
The lowest package has big limitations
USD Based Pricing

FNB Instant Accounting Software

FNB Instant Accounting is a free accounting
solution for FNB account holders. It has all the
basic features that one has to expect from a free
solution and should be sufficient to get the
information required for a sole proprietor or
business in its infancy stage. Instant Accounting
is a one-stop solution for your accounting needs.
It automatically creates financial statements and
VAT reports using your electronic FNB bank
statement.
However when it comes to the additional features
needed when running your business a couple of
extra hundred bucks will be worth it to rather pay
for a paid
Pros of FNB Instant Accounting
Free to use for FNB account holders
Good for sole proprietor starting out or a
business that does not have the cash flow to
spend on accounting software
Cons of FNB Instant Accounting
Lacks Features
Minimal Flexibility
Not suitable for larger or medium-sized
enterprises

Sage One Accounting Software

Sage One online accounting is an easy-to-use
accounting solution that’s also affordable for the
average small business owner. It’s fully packed
with loads of features and you can easily see why
they’ve been market leaders in the accounting
software space for so long. They have everything
you will have to expect from a paid accounting
software such as automatic bank feeds, reporting,
and all of the day-to-day functions such as
invoicing etc. But, although they have a great
product that will add value to any business their
product does leave you begging for more
simplicity and feature adjustments to create a
better overall experience.
Pros of Sage One Accounting Software
Pay per additional module (Helps small
businesses with more affordable options if
they don’t require advanced modules)
Cheap pricing
Has all the required features a business
owner needs
Has all the features accountants need
Payment integrations within the software
Has app Marketplace
ZAR based pricing
Cons of Sage One Accounting Software
Pay per user
 Pay per additional module
Bank recon less user friendly
than Xero or Quickbooks
Have experienced frequent bugs in software
Limited self help support when Googling
Less user-friendly interface

Quickbooks Accounting Software

Businesses and accountants alike swear by
QuickBooks, an accounting software package
developed and marketed by Intuit. The number
one priority of this program is to make sure your
numbers are on point which can be done through
the different features that it offers such as
accepting payments for businesses or paying bills
with its cloud-based application.
Quickbooks has been a long-
time favorite amongst small business owners
because of how easy they find the interface when
managing their finances–this includes making all
important financial decisions. Quickbooks caters
to the small-and medium-sized business owner
and has some awesome features for your
business.
Pros of using Quickbooks Accounting
Software
Affordable Pricing
Easy to use interface
ZAR Pricing
All required features for business owners
All required features for accountant
Best suited for sole proprietors or smaller
businesses
Cons of using Quickbooks Accounting
Software
Smaller app marketplace
Less impactful reporting
Less suitable for larger businesses