Account 4 Marks Question

Applications of Computers in Accounting.

1. Recording of all business transactions: All the relevant business transactions are recorded accurately and regularly or making available up to-date accounting information to the management.
2. Preparation of various ledger accounts: It prepares various ledger accounts such as Cash, Bank, Sales, Purchases, Debtors and various nominal and real accounts.
3. Processing the payroll information: It processes the payroll inforrnation relating to wages and salaries paid or payable during the accounting period.
4. Preparation of Trial Balance: It prepares the trial balance to ensure the arithmetical accuracy of accounting transactions so recorded, arranged and classified systematically.
5. Preparation of Final Account: It is helpful in preparing the final accounts such as Manufacturing Account, Trading Account, Profit and Loss Account, Profit & Loss Appropriation Account and the Balance Sheet at the end of the accounting period. It also provides for the automatic reconciliation of accounts.

Role of Computer in Accounting:The manual system of recording accounting transactions requires maintaining books of ac­counts such as journal, cash book, special purpose books, and ledger and so on. From these books summary of transactions and financial statements are prepared manually.
The advanced technology involves various machines, which can perform different accounting functions, for example a billing machine. This machine is capable of computing discount, adding net total and posting the requisite data to the relevant accounts.
With substantial increase in the number of transactions, a new machine was developed to store and process accounting data with greater speed and accuracy. A computer, to which it was connected, operated this machine.
As a result, the maintenance of accounting data on a real-time basis became almost essential. Now maintaining accounting records become more convenient with the computerized accounting.

Advantages of Word Processor:

1. Instead of typing the full matter again, any word, line or paragraph previously typed can be changed, erased or shifted to new location. New words or lines can also be insertec wherever needed.
2. Printing facilities are also available in a word processor. We can obtain the error free printed copies of the matter and also without any sign of the rectification of an error.
3. The matter once typed can be arranged in different formats, styles and also in a desired width of the page. If a new line or word is inserted or deleted, the space between the words is automatically adjusted in a fraction of a second.
4. The word processor also helps in checking the spelling of words. It contains a dictionary and automatically identifies the words in the typed matter that are not found in the dictionary.

Accounting software is used to collect information about and report on the financial viability of a business. This software is critical to the proper administration of an organization. Before deciding upon which software package to use, it is important to understand the different types of accounting software, and under what circumstances each one should be used. The following list itemizes the general classifications of accounting software:

• Electronic Spread Sheets.
• Word Processor.
• Data Base Management.