INTRODUCTION TO

COMPUTERISED Explained By:

ACCOUNTING Ahmed Mire
Lecturer,
Department of
Management
Science,
Garowe- PSU
CONTENT
MEANING OF COMPUTERISED ACCOUNTING
TRADITIONAL/MANUAL SYSTEM OF ACCOUNTING
PROCESS OF COMPUTERISED ACCOUNTING
FEATUERES OF COMPUTERISED ACCOUNTING
DIFFERENCE BETWEEN MANUAL ACCOUNTING SYSTEM AND
COMPUTERISED ACCOUNTING
ADVANTAGES AND DISADVANTAGES OF COMPUTERISED
ACCOUNTING
PROCESS/STEPS IN COMPUTERISED FINANCIAL ACCOUNTING
ADVANTAGES OF THE COMPUTERISED FINANCIAL ACCOUNTING
SYSTEM
VARIOUS COMPONENTS OF A COMPUTERISED FINANCIAL
ACCOUNTING SYSTEM
IMPLEMENTATION OF ACCOUNTING CYCLE IN COMPUTERIZED
ACCOUNTING
ACCOUNTING PACKAGES
MEANING OF COMPUTERISED ACCOUNTING
As its name suggests, "computerized accounting" is accounting done
with the aid of a computer. It tends to involve dedicated accounting
software to keep track of a business or client's financial transactions.
Computerized accounting is a beneficial use of current technological
advances. Not only has it revolutionized the traditional paper methods of
accounting, but it has also created new types of accounting applications
for business. Companies now create entire accounting information
systems that integrate all business operations, including external
suppliers and vendors in the value chain.
Computerized accounting systems (or software) have replaced manual-
based accounting in virtually all businesses and organizations, providing
accountants, managers, employees and stakeholders access to vital
accounting information at the touch of a button. Computerized
accounting systems automate the accounting process--improving
efficiency and cutting down costs.
Computerized accounting has many advantages over traditional manual
accounting. Computerized accounting tends to be more accurate, is
faster to use, and is less subject to error than its manual counterpart.
TRADITIONAL/MANUAL SYSTEM OF
ACCOUNTING

Input Processing Output

Data & Manual

processing Information
instructions
PROCESS OF COMPUTERISED ACCOUNTING

Input Processing Output

Data &
instructions
-Cheques/ Electronic
Receipts Processing -Profit & Loss A/c
-Debit Notes Through -Balance Sheet
-Credit Notes Computers
-Invoices
FEATUERES OF COMPUTERISED
ACCOUNTING
1. Fast, Powerful, Simple and Integrated
2. Complete Visibility Enhanced User Experience
3. Accuracy
4. Speed
5. Scalability
6. Power
7. Improved Business Performance
8. Quick Decision Making
9. Complete Reliability
DIFFERENCE BETWEEN MANUAL ACCOUNTING SYSTEM AND
COMPUTERISED ACCOUNTING
Recording of data
Data entering
Classification and processing of data
Data Storage
Reporting
Accuracy
Lesser paper work
Codification of data
Data sharing
Adjusting entries
ADVANTAGES OF
COMPUTERISED
ACCOUNTING
Codification is possible
Easy control
Universal application
Easy to process voluminous data
DISADVANTAGES OF COMPUTERISED
ACCOUNTING
Needs heavy investment
Problem of security
Loss of data
An artificial device
Possibility of manipulations
Not suitable for small firms
Requires training on part of accountants
PROCESS/STEPS IN COMPUTERISED
FINANCIAL ACCOUNTING
Planning and opening of an Accounting System
Coding and setting charts of accounts
Entering of data
Posting
Bank reconciliation
Business transactions like invoicing and billing
Printing of trail balance
Preparation of Finalization of Accounts, e.g.. Income Statement,
Statement of
Financial Positions, Cashflow statements…etc.…
ADVANTAGES OF THE COMPUTERISED
FINANCIAL ACCOUNTING SYSTEM
Computerized System has a lot of memory, it can record and store
the large data in its memory, which is limited one in manual
system.
Due to Coding, it’s easy to record and process with the data in case
of computerized system.
The system is flexible.
The information provided by the computer system is believed to be
more accurate, reason being the chances of mistake are less in
this.
VARIOUS COMPONENTS OF A COMPUTERISED
FINANCIAL ACCOUNTING SYSTEM
The major components of financial accounting software are as
under:
-General ledger programs
-Accounts payable program
-Accounts receivable program
-Payroll program
-Fixed assets accounting program
-Inventory accounting programs.
IMPLEMENTATION OF ACCOUNTING CYCLE IN
COMPUTERIZED
ACCOUNTING
The primary objectives of the accounting function in an organization
are to process financial information and to prepare financial
statements at the end of the accounting period. Companies must
systematically process financial information and must have staff
who prepare financial statements on a monthly, quarterly, and/or
annual basis. To meet these primary objectives, a series of steps is
required. Collectively these steps are known as the accounting
cycle. The steps, applicable to a manual accounting system, are
described below. Later, there will be a brief discussion of a
computerized processing system.
CONT…IMPLEMENTATION OF ACCOUNTING
CYCLE IN
COMPUTERIZED ACCOUNTING
The Steps of the Cycle
Collect and analyze data from transactions and events
Journalize transactions
Post to general ledger
Prepare an unadjusted trial balance
Prepare adjustments
Prepare an adjusted trial balance
Prepare financial statements
Close the accounts
Prepare a post-closing trial balance
BASICS OF COMPUTERIZED ACCOUNTING
Because of the minute by minute change in finances, accurate
record keeping is critical. Computerizing a business’s general
ledger, payroll, and other accounting tasks increases office
efficiency. With a computer, you can request and receive an in
house balance sheet, an income statement, or other accounting
reports at a moment’s notice.
ACCOUNTING PACKAGES
There are various kind of accounting packages available in the
market. These softwares are designed and developed as per the
requirement of the business / corporate. Few of these softwares
cater to particular industry and few of these software are generic
like QuickBooks, Tally etc. Depending on the size of the business
and nature of the business these accounting packages can have
several types of classification. Let’s study these classifications in
detail:
CUSTOM TAILORED VS.
STANDARD PACKAGES
Many of the small business require basic level of accounting which
involves ledger, profit and loss account, cash book, vouchers etc. This
type of need is catered by the generic software which is called as
Standardized packages. These packages are easy to use and can be
easily implemented for SMEs as they share common set of
functionalities of accounting. Packages like QuickBooks & Tally are an
excellent example of Standardized packages. But for big companies or
business that have specific requirement of accounting deals require an
accounting package that could cater their specific needs. So to cater
that group software companies develop customized accounting
packages or tailor their existing accounting package (ERP module) as
per business requirement. Custom / Tailored packages are more flexible
than standardized packages. Usually custom / tailored package cost
more than standardized packages.
SINGLE VS. MULTIPLE USER
For the companies which are small in operations and require only basis
level of accounting, usually desktop based application based software
serve their purpose which have single user. Single user accounting
packages have only basic set of functionalities of accounts and less
scalable. Packages like busy are single user based accounting
package. Big companies which operate at multi locations require
accounting package which could be installed at multiple locations and
could be operated by multiple users at the same and all the
accounting data could be stored in one location. These multi user
packages are web based application and always require internet
connectivity. These are highly scalable and require huge infrastructure
TOP ACCOUNTING SOFTWARES
IN THE MARKET
Simply put, accounting is the lifeline of a business. Accounting deals with summarizing,
analyzing and reporting the financial data and information about a business. An accounting
software records and processes the accounting transactions of a business within its
functional
modules. Financial statements consisting of the balance sheet, profit and loss account, and
statement of changes in financial position can be easily prepared with accounting software.
Accounting software is all about the various functional modules that it has. Some of them
are:
General ledger which takes care of the company's financial dealings; Accounts Payable
where
the company enters its bills and pays the money it owes; Accounts Receivable where
money
received is entered.
CONT… TOP ACCOUNTING
SOFTWARES IN THE MARKET
a. Small business/personal accounting software which are mainly meant
for home users. They are simple and inexpensive with simple
functioning such as management of budgets.
b. Low end accounting software are for small business markets that are
capable of serving a single national market. Such software are
characterized by 'single entry’ products.
c. Mid market accounting software are for companies with large
businesses. These software are capable of serving the needs of
multiple national accountancy standards and facilitate accounting in
multiple currencies.
d. High end accounting software are complex and expensive business
accounting software that are also known as Enterprise Resource
Planning or ERP software.
CONT… TOP ACCOUNTING
SOFTWARES IN THE MARKET
However, you have to keep certain things in mind before buying an
accounting software, like the prices of the software, its different
features, its after-sales support and alike. Most of the accounting
software include all the important accounting modules. The more
specialized features a software has, the more expensive it becomes.
Your software features must be compatible with your business. Also,
the after-sales support is important like FAQ package, local service
center and others.
There are a lot of top accounting software available in every
category. So, it is not easy to select the best ones. Below are top
five accounting software in every category.
See the next page….
CONT… TOP ACCOUNTING
SOFTWARES IN THE MARKET
A. Small business/personal accounting software:
1.ePeachtree (Best Software)
2.MYOB Plus for Windows (MYOB Software)
3.Peachtree Complete Accounting (Best Software)
4.QuickBooks Online (Intuit)
5.Small Business Manager (Microsoft)
B. Low-End Accounting Software:
1.BusinessVision 32 (Best Software)
2.MAS 90 & MAS 200 (Best Software)
3.QuickBooks Pro 2003 (Intuit)
4.ACCPAC Pro Series (ACCPAC International)
5.Vision Point 2000 (Best Software)
CONT… TOP ACCOUNTING
SOFTWARES IN THE MARKET
C. Middle-Market Accounting Software:
1.ACCPAC Advantage Series Corporate Edition (Best Software)
2.Great Plains (Microsoft) MAS 90 & MAS 200 (Best Software)
3.Navision (Microsoft)
4.SouthWare Excellence Series (SouthWare)
5.SYSPRO (SysproUSA)
D. High-end accounting ERP Market:
1.Axapta (Microsoft Software)
2.e-Business Suite (Oracle)
3.MAS 500 (Best Software).
4. Solomon (Microsoft)
5.ACCPAC Advantage Series Enterprise Edition (Best Software)
CONT… TOP ACCOUNTING
SOFTWARES IN THE MARKET
In compiling the above list, a variety of factors such as feedbacks from
customers, scalability of the software, and after-sales support are used.
Also, the different attributes for different categories have been
considered like for ERP software, attributes such as manufacturing
solution, supply chain solution and database solution. The above
compilation may not be all inclusive and some people might choose to
differ with it but it is almost near to perfect list.
 OVERVIEW OF STANDARD
ACCOUNTING PACKAGES
QUICKBOOKS ACCOUNTING
SOFTWARE
QuickBooks is an accounting software package developed and marketed by
Intuit. First introduced in 1983, QuickBooks products are geared mainly toward
small and medium-sized businesses and offer on-premises accounting
applications as well as cloud-based versions that accept business payments,
manage and pay bills, and payroll functions.
History
Intuit was founded in 1983 by Scott Cook and Tom Proulx in Mountain View,
California, USA. After the success of its Quicken product for individual financial
management, the company developed similar services for small business
owners.
Initial release
The initial Quicken software did not function as a "double-entry" accounting
package. The initial release of QuickBooks was the DOS version that was based
on the Quicken codebase. The Windows and Mac versions shared a different
codebase that was based on In-House Accountant, which Intuit had acquired.
The software was popular among small business owners who had no formal
accounting training. As such, the software soon claimed up to 85 percent of the
US small business accounting software market. It continued to command the
vast majority of this market as of 2013. Professional accountants, however,
were not satisfied with early versions of the system, citing poor security
controls, such as no audit trail, as well as non-conformity with traditional
accounting standards.
 SUBSEQUENT RELEASES
Intuit sought to bridge the gap with these accounting professionals, eventually
providing full audit trail capabilities, double-entry accounting functions and
increased functions. By 2000, Intuit had developed Basic and Pro versions of the
software and, in 2003, started offering industry-specific versions, with workflow
processes and reports designed for each of these business types along with
terminology associated with the trades.
Options now include versions for manufacturers, wholesalers, professional
service firms, contractors, non-profit entities and retailers, in addition to one
specifically designed for professional accounting firms who service multiple
small business clients. In May 2002 Intuit launched QuickBooks Enterprise
Solutions for medium-sized businesses.
In September 2005, QuickBooks had 74% of the market in the US. A June 19,
2008 Intuit Press Release said that as of March 2008, QuickBooks' share of retail
units in the business accounting category reached 94.2 percent, according to
NPD Group. It also says that more than 50,000 accountants, CPAs and
independent business consultants are members of the QuickBooks ProAdvisor
program. By then Brad Smith was the new CEO, though former CEO Steve
Bennett had nearly tripled Intuit revenue and quadrupled earnings in eight years
 CONT.…SUBSEQUENT
RELEASES
On September 22, 2014, Intuit announced the release of QuickBooks 2015 with
features that users have been requesting from the past versions. The release
includes improved income tracker, pinned notes, improved registration process and
insights on homepage.
In September 2015, Intuit released QuickBooks 2016 that contains several
improvements to the existing ones and new features such as batch transaction, bill
tracking, continuous feed label printer support, batch delete/void transactions etc.
In September 2016, Intuit released QuickBooks 2017 with several improvements
like automated reports, smart search and improved viewing of report filters among
other things.
In 2017, Intuit released QuickBooks 2018, adding features such as mobile inventory
barcode scanning, multi-monitor support, search in the chart of accounts, etc.
On September 17, 2018, Intuit announced the release of QuickBooks 2019 with
some unique features requested by its users, including a history tracker for
customer invoices, the ability to transfer credits between other jobs of the same
customer, payroll adjustment feature, and more.
 CONT.…SUBSEQUENT
RELEASES
On September 16, 2019, QuickBooks 2020 was launched with the aim to improve the
reliability and experience of using the software. All the desktop versions - Pro, Premier,
Accountant, and Enterprise - include new features like the ability to add customer PO
numbers in email subject lines, send batch invoices to customers, automatic payment
reminders, collapse and expand columns, easy QuickBooks version update etc.
On September 4, 2020, Intuit rolled out QuickBooks 2021 with improved payment process
and automated features. All the desktop editions in this version have streamlined bank
feeds, automated receipt management, rule-based customer groups, payment reminders,
customized payment receipts, data level permissions, and batch delete sales orders.
Every Year during September the company releases additional improvements with its
existing versions.
There are currently four QuickBooks versions available in their desktop solution as well as
QuickBooks Online and International Versions like UK, Indian and Australia QB Versions.
QuickBooks Pro.
QuickBooks Premier.
QuickBooks Enterprise.
QuickBooks Accountant
QuickBooks Online
We shall do our practice using QuickBooks Enterprise 2021 version.(see the user guide
shared)
 WHAT DOES QUICKBOOKS DO
FOR YOU
 Track Customers, vendors…etc.…
Process Sales transactions and cash receipts
Process Purchase transactions and payments to vendors
Track and sale Inventory
Track Assets (What you Own) and Liabilities (What you Owe) and the
Equity (Residual Interest/ Asset- Liability)
Keep Track of bank accounts
Reports Generating
 QUESTIONS
a. What do you mean by computerized accounting? Discuss the
implementation of Accounting cycle in computerized accounting?
b. Discuss the modern methods and explain the advantages of these
methods over traditional methods?
c. Explain the concept of General ledger?
d. Explain various advantages of using the computer in accounting?
e. Differentiate between Custom packages vs. Standardized packages?
f. Differentiate between Single user vs. Multi user packages?
g. Briefly explain any of the accounting package. Enumerate all its features?
h. What are the factors to be considered for selecting a good accounting
package?
i. List some top accounting softwares available in the market?
j. Discuss what is meant by QuickBooks and it’s features and uses?
 CIC PRACTICAL PARTS
CONTENTS (BASICS IN QB)
1. Introduction (PPT)- Covered
2. Getting Started (Practical)
-Setting Up Your Company File
3. Customizing the QB Environment
-Overview
-Preferences
-Working with Charts of accounts
4. Working with Customers & Jobs
-Creating New Customers
-Estimates and Sales Orders
-Creating Invoices
-Creating Sales Receipts/Cash Sales
-Receiving Customer Payments
-Etc.…
 CONT..CIC PRACTICAL PARTS
CONTENTS (BASICS IN QB)
5. Working with Vendors
-Creating New Vendors
- Entering Bills
-Paying Bills
-Create Memos
-Etc.…
6. Working with Items & Inventory
-Working with Item Lists
-Purchase Orders
-Receiving Items
-Creating Bills for Items
-Inventory on hand Adjustments
7. Working with Bank transactions
-Write Check
-Make Deposits
-Bank transfer
-Etc.….
 CONT..CIC PRACTICAL PARTS
CONTENTS (BASICS IN QB)
8. Others necessary topics
-Backup and restore,
-Accruals & Prepayments,
- Users’ management and closing date password settings.
-Etc...
9. Financial Reporting Generating
10. Wrap Up
-Finalization
END