Question

Explain the importance of computerized accounting system.

State the importance of the computerised accounting system.

Answer 1

1. Automation: The accounting software automatically performs all calculations in less time than manual accounting calculations.
2. Multi-user-Facilities: Multi-user facilities enable the businessman to access accounting information online or offline with more user controls outside of the office or within the office. In big business houses, this facility is useful because many operators can enter data on different computers simultaneously.
3. Accuracy: Computerized accounting software is more accurate as compared to human beings. Software automatically performs all calculations, including additions, subtractions, and statistical calculations.
4. Speed: Computerized accounting software works faster than manual accounting processes. It generates all financial statements and reports speedily as per user requirements.
5. Reduction in Cost: As the financial records are entered only once in the system, the accountant will save time in maintaining the records. This will enable the business organization to employ a few accounting personnel.
6. Systematic and up-to-date records: A computerized accounting system ensures systematic and up-to-date financial records of the business organization.
7. Huge Storage Capacity: In case of manual accounting, it is required to maintain separate Books and Registers for each financial year. In the case of a computerized system, a single software program can store accounting records for many years.
8. Compact: No matter how voluminous the financial data is, the computer can store it in a compact way. The financial information can be stored on the hard disk and if required, backups can be taken on the external storage devices, which require very little space.
9. Transferability/Sharing Information: Computerized accounting systems allow the business organization to share the financial information with the interested parties. The information can be shared with the help of printouts or can also be shared with a soft copy, i.e., through a pen drive or internet transfer.