Computerised Accounting and Accounting Software Basics
What is examined
This domain covers the meaning and features of computerised accounting, its differences from manual accounting, the components of a computerised accounting system, the types of accounting software, and basic operations of a standard package such as Tally.
Core points
- A computerised accounting system stores transactions as data, processes them by pre-written rules and produces reports automatically; the principles of double entry do not change, only the medium does.
- Advantages: speed, accuracy, handling of large volumes, instant reports, easy backup and retrieval, and better control. Limitations: installation and training cost, risk of data loss or tampering, dependence on power and hardware, and the need for strong security.
- Software types: readymade (ready-to-use), customised and tailor-made (bespoke). Modules follow the accounting cycle: company creation, groups and ledgers, vouchers and reports.
- Coding: every ledger is created under a group. Reports such as the trial balance, profit and loss account and balance sheet are generated from the same data, so one wrong voucher distorts all of them.
Worked example
A firm deposits ₹25,000 cash into its current account with the State Bank of India. The transaction is internal to the business with two aspects, so it is entered through a Contra voucher (F4 in Tally), crediting the cash account and debiting the bank ledger. Because the ledgers already sit under the correct groups, Cash-in-Hand and Bank Accounts, the balance sheet updates automatically and no manual posting or balancing is needed.
Traps
Assuming computerised accounting removes the need to understand double entry; recording a credit purchase through a payment voucher instead of a purchase voucher; creating a ledger under the wrong group; expecting the software to detect an error of principle; ignoring password control and data backup.