Computerised accounting

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MODULE – 5 : COMPUTERISED ACCOUNTING
Introduction and Meaning:
In olden days, businessman used to keep the accounting records
manually. IN preparing the accounting records calculators were used. But
now a days financial accounts are prepared with the help of computers after
its invention. Computer is an electronic device, which accepts input as data,
performs operations ( or computations) on the data and provides the results
as an output. Computers and its related technologies will help to improve
accounting work, office work, administrative work, clerical work and executive
work. Computer has the ability of storing and executing a given set of
instructions for solving particular problem as required by the businessman.
Now a day various software applications are available in the market, which
helps to maintain the accounts in the computers.
In computerized accounting computers are used to record business
transactions and also for preparing financial statements from the books of
accounts of a business.
Working of Computers :
The working of computer is like a human brain. Computer is a device
that has been developed no assist the human in his day to day activities. The
computer work is divided into four function. They are :
1) Memory
2) Processing
3) Input
4) Output
1) Memory : The function of storage in a computer is carried in many
different sizes, types and shapes. However there are two basic
categories “Short term” and “Long term”. A typical computer contains
numerous types of memories including Ram, Rom virtual cache and
various long term storage devices. Each type of computer memory
serves a specific function and purpose.
2) Processing : The processing part of activity is considered as very
important and it is done through the “micro processor”. The micro
processor is also called as central processing unit (CPU). The micro
processor is a chip having postage stamp size. The processor is the
very important part of the computer. The micro processor controls how
data is sorted and directs the flow of data. The computer is defined by
the power of its micro processor. Chips with higher processing speed
and more recent design offer greatest performance and access to new
technologies.
3) Input : Input is a process of feeding information to the computer. It is
the feature of computer to command and feed the information.
Without an input device working of computer is not possible. Input
device can be built in the form of key boards in the lap top or it can be
connected to the computer by a cable. The most common input device
is the “key board”. There are many other types of input device like,
mice, track balls, touch pads, touch screens, pens, joysticks, scanners,
bar code readers, video, digital camaras and micro phones. In addition,
storage device such as disk drives can serve as input device.
4) Output : Output is the ability to read what the computer is doing. It is
as important as input. The computer output is to serve the user. The
most common output device is the moniter or screen. Now a days
computer are coming with speakers and printer which are excellent
output device. Storage devices such as, disk drives and diskettes also
serve as output device when it is necessary to write new or updated
data files to disk or tape.
Feature of Computerized accounting :
The main features of computerized accounting are as follows:
1) Speed : Computer being an electronic device will work faster than
human beings. It turns out large quantum of work with in no time. It
converts data into required information at high speed.
2) Accuracy : The work carried out by computer is always accurate
because computer is the electronic device where mistakes are not
expected.
3) Reliable : Computer accounting is always accurate as compared to
manual work because computer is electronic device which will not
commit mistakes in the normal course of work, so it is reliable one.
4) Non stop work : Computer can be made to work around the clock,
that we cannot expect from human being.
5) Economy : Computerized accounting is cheaper when compared with
human labour. Machine once purchased will be lasting for many years
but human labour is to be paid continuously.
Distinguish
accounting
between
manual
Manual accounting
accounting
and
computerized
Computerized accounting
1) Process of work consumes more 1) Process of work consumes very
time
less time
2) Human is subject to commit 2) Computer works accurate and
mistake
reliable
3) Human
continuously
being
work 3) Computer can work continuously
cannot
4) Manual records are not subject to 4) Computer records are subject to
manipulation
risk to manipulation
5) Manual accounting requires 5) Computer accounts requires only
continuous recording from beginning beginning records, then it generates
to the preparation of financial final accounts of any other reports
accounts
automatically
6) Manual accountings are visible
7)
Computer
knowledge
is
6) Computer records are not easily
visible
not 7) Computer knowledge is necessary
required
8) High cost of operation
8) Low cost of operation
Advantages of Computerized accounting :
Following are the of advantages of computerized accounting:
1) Work is done with ‘high speed’
2) Up to date informations are available to the management.
3) Informations are quite accurate and reliable.
4) The cost of operation of computer accounting is very low.
5) Businessman can get final accounts report by feeding primary records
in computer.
6) A computerized accounting is error free.
7) Multiple copies can be obtained from the initial feeding of the
transactions.
8) A quantum of accounting can be stored in computer.
9) Computer has instant recall capacity.
10) Computerized accounting ensures neat and clean accounting system.
11) Computer accounting has provision for adding, deleting and modifying
master file records.
Disadvantages of Computerised Accounting :
Computerised accounting no doubt has many advantages but still
suffers from following limitations.
1) Computerized accounting requires qualified professional to prepare
speed programs to carry out accounting operations.
2) In initial stages computerized accounting system and its programs are
costly.
3) Only technically qualified person can operate a computer so, to train
the existing staff it involves the training cost.
4) A computer requires various peripherals like floppy, CD, printers and
other stationery items that are costly.
5) Computer accounting requires regular back up on various storage
devices such as hard disk, floppy, and magnetic tape to guard against
possible loss of data.
6) Data in computer are subject to risk of computer viruses. The viruses
may destroy the whole data in the computer and also those kept as
back up.
7) There is greater possibility of risk of obsolescence due to change in
technology.
Factors to be considered while introducing computerized accounting in
business concerns.
Even before introducing computerized accounting in a business
concerns, certain factors have to be considered. Those factors are:
1) Administrative Factors : The management must verify whether the
computerized accounting system can operate successfully if it is
introduced in the business concerns and whether the employees of the
accounting department have the required knowledge. If there is need,
the management must provide the training to the employees.
2) Technical Factors : The management must ascertain whether the
technology of the business concerns permits the introduction of
computerized accounting. Even the management has to verify whether
accounting package will meet the requirements of business concerns.
3) Economic Factors : The management should ascertain whether it is
economically feasible to adopt such a system. That is, it should verify
whether the economic benefits from the computerized accounting
would be more than cost of manual accounting,
Area in which computerized accounting is commonly used :
Computerized accounting system can be used in a business for the
various purposes. But computer can be used successfully in the area of
accounting. Accounting work means recording of transactions, processing and
getting required informations from the data fed. Computers are successfully
used in the following areas:
1) Transactions Processing : Transactions are the backbone of the
business. Every transaction of a business is to be recorded and posted
to the concerned accounts in the ledger. This activity is prime factor in
the concerns because transactions are fed to the computer then only
informations will be obtained after necessary processing.
Manual accounting may not be effective where the number of
transactions are more. Computer accounting can overcome from, such
difficulties. To the computer once the transactions are fed it
undertakes automatically the process of posting and preparation of
final accounts.
2)
Payroll Accounting : Payroll is a statement prepared to determine the
amount of wages or salary payable to the workers or employees of the
organization. In a large scale organization where huge number of men
and women are engaged in work, it becomes great difficult to prepare
payroll which includes the various benefits which are to be added and
several personal deductions are to be made from the benefits.
3) Debtors Accounting : Debtors are the persons from whom money is
receivable from time to time as per the agreement. Perfect
maintenance of accounts in receipts of debtors is very important to
collect dues from them. If becomes systems is improper then there is a
possibility of bad debts and dues may not be collected as per
agreements.
To, avoid above difficulties computerized accounting can be introduced
and which will undertake the activity of proper recording remending
the due dates for collection and giving every details of the debts.
4)
Stores Accounting: Store is one of the departments where, raw
materials, consumable stores and other materials are stored. All these
materials are very essential items to run day-to-day activities of the
concerns. Any shortage of these things may leads to stoppage of work
or any surplus may leads to wastage of materials.
To maintain proper stock level in the organization and for smooth
running of all the activities of the organization it is essential to adopt
the computer accounting system for the stores.
5) Preparation of various type of budgets : Budget is a predetermined
figure, which are compared with actual figure to know the efficiency in
actual performance.
Predetemrination needs very special skill, which is incorporated in the
software packages. Computers will support to prepare budgets like
cash budget, production budget, purchase budget, sales budget,
production budget etc. Now a days business man uses this computer in
the preparation of various budgets.
6) Preparation of financial statements : Every organization will have to
prepare financial statements like trading account, profit and loss
account and balance sheet. These statements are prepared on the
basis of prime records of the business. Trial balance is prepared to
ascertain correctness of the ledger accounts.
Manual accounting needs the reference of every account of the ledger
to prepare trail balance and final statements of accounts. But once
prime data are fed into the computers with the help of accounting
packages automatically. It prepares the trail balance and financial
statements.
Role of Computer in Accounting :
Computers are probably the only tool available that can help us in
storage and organization of data and information. Today computer industry is
the biggest industry worldwide and has a great impact on the society. The
computers became popular because of the following features.
 Speed
 Reliability
 Diligence
 Versatility
 Large memory
Role of computer in accounting and business organizations
Help in Operations : Computers help in various accounting operations like
invoicing, calculation of wages, maintaining ledger etc.
Help in Controlling : With the help of computers, a business concern can
have better control over its operation. They help in budgetary control, sales
analysis, credit control etc.
A computer can process almost any type of information required by a
business. Some areas where computers are most popular are listed below:
 Inventory control
 System analysis
 Inventory control
 Sales accounting
 Market research
 Purchase accounting
 Planning and control
 Quality control
 Management accounting
FLOW CHARTS :
Meaning of Flow Chart :
A flow chart is, “a pictorial or diagrammatic representation of the step
involved in solving a problem”. It also shows the logical sequence in which
these steps are to be performed. The first formal flowchart was made by John
von Neumann in 1945. A flowchart consists of blocks called symbols and
arrows called flow lines. The block tells us what to do and flow lines shows us
the next step to be followed.
There are two types of flow charts :
1. System Flow chart
2. Program Flow chart
System Flow Chart :
A system flow chart depicts the entire data flow throughout a data
processing system. That is a system flow chart shows the path through which
the data is passed from one processing unit to another within the company.
Program Flow Chart :
Program flow chart is commonly used in solving the problems. It is
used to describe the logic of a program that is how different instruction in a
program fit together.
Program Flow Chart Symbols :
Geometric figure
Name
Function
Oval
Start & stop
Parallelogram
Input and output
Rectangle
Processing
Diamond
Checking conditions
Arrows
Connections
Small circle
Continuation
Hexagon
Repetition / looping
Ex: Draw a flow chart to find out the total marks of 3 subjects
start
Read A,
B, C
Total = A+B+C
Print Total
Stop
Ex: Draw a flow chart to find the largest of two numbers.
Start
Read A, B
Is
A>B
Print B is
large
Print a is
large
Stop
Ex: Write a flow chart to find the simple interest.
start
Input P,T,R
S=PTR/100
Print S
Stop
ACCOUNTING FLOW CHART


Cash Flows
Legal
Debit
Claims
by the
Credit
Entity
Legal
Debit
Claims
against
the
Credit
Entity
Key to symbols
Accounting Flows
Amounts
Increases
Debit
Claimed
in Assets
Tangible
Assets
Amounts
Decreases
Credit
Settled
in Assets
Amounts
Losses or
Gains and
Debit
Settled
Expenses
Losses
(Income and
Amounts
Gains or
Credit
Expenditure)
Claimed
Income
O
Cash Flows
1. Cash purchase – Stock (Inventories)
2. Cash Sales or Revenue Income
3. Cash Settlement – Creditors
(Payables)
8. Investment Withdrawl
9. Cash Expenses
10. Investment of Cash in Monetary
Instruments
4. Cash Settlement – Debtors
(Receivables)
5. Dividends or Share (Stock) Repayment
6. New Share Capital
7. Payment from Funds
11. Loan Repayments
12. Loans Raised
13. Capital Expenditure
14. Sales Fixed Assets
Accounting Flows
1. Use of stocks (Inventories)
2. Sales Income
3. Expenses (Trading, Operations,
Manufacturing)
4. Revenue (Recurrent) income
5. Credit Purchases
6. Cash Discount Received
7. Gross Profit (Trading, Operations,
Manufacturing)
8. (Sales & Operational) income
recoverable
9. Taxes now payable
10. Expenses (Profit and Loss or Income
and Expenditure)
11. Net Loss or Net Expenditure
12. Net Earnings or Net Income
13. Allocated or declared dividends
14. Transfers to reserves
15. Capital Repayable
16. Surplus on Investments (Credited
as Income)
17. Future Income or Corporation Tax
(Provision)
18. Extra Ordinary losses
19. Expenses Paid in Advance
20. Surplus on Investments (Credited
as Capital)
21. Bad Debts or Discounts Allowed
22. Transfer of Expenses
23. Accrued expenses
24. Transfers to Special Fund /
Provision for expenses
25. Investment Losses
26. Depreciation (Commercial or
Enterprise Accounts) and Capital
Discharged – by Loans repaid,
revenue contributions to capital or
special funds applied (Muncipal Public
sector accounts)
27. Revaluation of fixed assets
28. Revaluation of accumulated
depreciation
ACCOUNTING FLOW CHART
1. The attached chart illustrates the working of the entire accounting
system of any financially autonomous entry, keeping its accounts
on an accrual basis. It can be applied to private sector, public
utility, enterprise or municipal accounting systems.
2. It is possible that well over ninety five percent of accounting
entries, for any kind of business, are represented by the fourteen
cash flows and twenty eight other book entries represented on the
chard. Thus, forty two entries cover all transaction types.
3. Each class of account has been given a separate symbol. In the
“key to symbols” box, those on the left represent “Personal”
account (debtors and creditors). Those on the right represent
“Real” account (cash, stock of goods/ materials and fixed assets)
and
“Nominal”
account
(gains
and
losses
–
income
and
expenditure). Furthermore, the symbols with straight sides (square
and triangles) represent resources (assets and liabilities), whilst the
circles represent the analysis of results (gains and losses).
4. Each line represents a class of business transaction or a generally
recognized accounting adjustment. Where a line touches the left
hand side of an accounting the right hand side represents a credit.
Solid line represent cash flows and broken lines represent
accounting entries not directly related to cash transactions.
5. The arrows on the lines are somewhat arbitrary. However, they
attempt to show the direction in which each transaction is normally
understoond to flow. The entries are conceptual, not legal. For
example, the transfer of extra ordinary losses (and fixed asse
revaluations) direct to “Capital and Reserves” is regarded as bad
accounting practice in many systems but is acceptable in other. In
this chart, they have been shown as direct transfers to “Capital and
Reserves”, merely for simplicity.
6. The chart indicates that an accounting system, whilst complex, is
bounded and closed. For accountants, it may assist in systems and
computer work. For non accountants, it may be useful in
understanding what accountant are doing (or suppose dto be
doing) and may also help to develop an appreciation of what can
and should be expected from an accounting system. For students of
accounting, the chart may represent a useful learning tool, to be
used in conjunction with other teaching materials.
7. The chart covers most accounting procedures likely to be
encountered. It includes, moreover, the two main entries concerned
with the conversion of historical cost accounts to current values.
This is still a matter of uncertainty and contention among
accountants and is not practiced in all systems. However, unless
recognized, especially where high rates of inflation exist, fixed asset
(and other non-monetary asset) values, based only on historical
costs, become increasingly meaningless. Furthermore, depreciation
(and other capital charges) based of these historic values will cause
the under statement of cost and a corresponding over statement of
profits.
Computer Process (Important Aspects of Computerized Accounting) :
Data Processing :
Data :
The word data is the plural of the word datum, which mean fact.
Therefore, data means collections of facts. Data can be considered as the raw
material of information. The data may be numerical such as sales report,
inventory figures etc.
Data Processing :
Mere data cannot solve any problem. The solution can be arrived at by
organizing and manipulating the data. Data processing is the conversion of
data into a more useful form. That is, transmission of data into meaningful
information is called data processing.
Information :
The result obtained by data processing is called information. That is,
the processed data is known as information. However, information produced
in one data processing step may be used as data in the next data processing
step.
For Ex: Statement of marks
In the statement of marks, the candidate’s names, roll numbers and
marks obtained forms the data but the result sheet which gives the roll
numbers in serial order followed by candidate’s name marks in the different
subjects and distinctions, if any is known as information.
Concept of Data processing :
Data processing cycle:
Data processing is viewed as a system that accepts data as input,
processes it into information as output.
This can be explained with the help of the following diagram.
Input Facts &
Things
Processing
Output
Processed Data
Figure Stages of Data Processing
In data processing technique, all the facts and things are collected as
input fed to the computer. After processing this input the processed data is
nothing but the output or information.
For example, consider the payroll example. Here the name, employee
number, salary, DA (Dearness Allowance), HRA (House Rent Allowance) etc
are the data of the income of the employee. The deductions such as income
tax, professional tax, LIC, FBF (Family Benefit Fund) etc. are collected and fed
into the computer. The computer then calculates the net salary of an
employee. Finally, a report of the salary bill is generated which will be given
to the employee.
Data Processing System:
The term data processing system is used to include the resources
which are used to accomplish the processing of data. Data processing is
mainly associated with business and commercial work.
Type of Data Processing Systems :
There are three types of data processing systems.
1. Manual Data Processing Systems.
2. Mechanical Data Processing Systems.
3. Electronic Data Processing Systems.
1. Manual Data Processing System :
The word manual comes from the Latin word which means hand. The
manual data processing is used for nonelectronic methods of data
processing. In the nonelectronic method human intervention is needed
to complete the act of data processing.
In manual data processing, human being converts the data into
information. Here the data is processed using manual operations such
as abacus, sliderrule, Napierbonese etc.
2. Mechanical Data Processing Systems:
In mechanical data processing, a person uses and controls various
machines to get the work done. It consists of various electomechanical
devices such as calculators etc.
3. Electronic Data Processing Systems :
In electronic data processing, the data is processed either using analog
or digital computer.
The advantages of Edata P S are :
- Fast Processing
- Decision making
- Huge Storage
- Performance
- Accuracy
- Automation
- Quick access
Apart from these three data processing systems some more data
processing systems are also available those are
1. Interactive data processing system.
2. On line data processing system.
3. Distributed data processing system.
3.1.3 Data Representation :
The computers handle the data by electronic components. As we know
normally the computer understands only one language is binary language,
which consists of only two symbols namely 0 & 1. This is also known as
machine level language. Unfortunately the most common way to represent
data is the use of numerals 0 to 9 and alphabets A to Z along with the
some special symbols such as +, -, * and / etc.
In make the communication possible between a computer and a man,
data must be coded in the form of understandable to the computer and
information supplied by a computer, as a result of data processing, must
be decoded in the form of understandable to the user. The responsibility
of coding and decoding in a computer system lies with input – output
devices.
Number Systems :
There are four number systems. They are:
a) Binary Number System
b) Octal Number System
c) Decimal Number System
d) Hexadecimal Number System
a) Binary Number System :
The number system using only 0 and 1 is called binary number system.
Each digit of a binary number can have either 0 or 1 only. Eg : 1010
b) Octal Number System:
In octal number system, the base is 8, and there are 8 digits, say, 0, 1,
2, 3, 4, 5, 6, 7, eg: 35.
c) Decimal Number System:
In the decimal number system, the base is 10 and the possible digits
are 0, 1, 2, 3, 4, 5, 6, 7, 8, 9, A, B, C, D, E and F. Eg: 0XAF
Concepts of Computer Files :
File is defined as “a collection of related information maintained in
some order”
The different types of computer files used in business are as follows:
i) Master files
ii) Transaction files
iii) Report files
iv) Historical files
v) Backup files
vi) Reference files
i)
Master Files : Master files contains permanent records for
identification such as employees file, client file, product file etc.
ii)
Transaction Files : Transaction files are the detail files, and the
information in the transaction files are the detail files, and the files.
The source of documents from which transaction files are created
are purchase sales order, purchase order, job cards etc.
iii)
Report Files : This file is creasted by taking data from other files
say, from master files i.e., transaction file for ex: Sales performance
report, employees report etc.
iv)
Historical Files : This files includes statistical data of past periods
and these files are used to make comparisons between two periods.
v)
Backup Files : Backup files means the files which are already in
the computer systems as a safety measure kept in the computer
library.
vi)
Reference Files : Reference files are those files which contain the
key to record in other files.
Data Base System :
A database is a collection of related data. For ex telephone catalog is
data base with the related data such as names, telephone number and
address of the people.
A database can be simple or complex. It may be small or big. The
colleges may have their student database and library database, the student
database may consist of the names of the students, divisions, data of birth,
fees etc. Similarly the library database may have the titles of the books,
authors, publishers.
A database is a collection of related data which is available to many
users. A database can handle business applications such as inventory,
accounting and preparing notes.
Database management system:
A database management system (DBMS) is a collection of programs
that enable users to create and maintain a database. There are different
types of DBMS software that are available today. Ex : MS-Access, Oracle,
Sybax, Ingress are some of the popular DBMS RDBMS softwares.
A database is a managed by a software packages known as a database
management system. A database management system is a combination of
hardware and software that can be used to set up and monitor a database.
The terms used in database:
 Data consists of the value of the attributes of the entitles.

Attributes are the characteristic of an entity.
 An entity is any quantity or abstract object in the organization or
the user environment.
 Relationship is some sort of connection between entitles.
 Data value is the actual data or information contained in each data
element.
 The values are nothing but symbols assigned to attributed of
specific entities in the real word.
 Data item is the smallest unit of names data.
 A data item is also called as fields of data element.
 A record is nothing but collection of fields.
 A file is collection of records.
 A data file is a collection of data records.
Advantages of Database :
The properly assigned database provides the following advantages.
1. Duplication of the data is eliminated because the input of data is made
only once.
2. Redundant data is eliminated as elements of data are stored at only
one location.
3. Confidentiality of information is attained by the use of passwords
authorized personnel.
4. Data can be stored at high speed and searched in accordance with
defined parameters.
5. Special report layouts can be generated according to specific needs.
6. Data can be retrieved very quickly.
7. Data can be subjected to calculations.
8. Records can be browsed through the display screen.
9. A common database facilitates the integration of systems.
Limitation :
1. Reduction in speed of data access time.
2. Requires special knowledge
3. Possible dependency of application.
Spread Sheet :
In our daily life, many transaction take place and it is not possible to
remember all the transactions to help us in recording such transactions,
electronic spreadsheets are used.
Meaning of Spreadsheets :
Spreadsheets are application programs used for doing calculations
plotting data and presenting numerical information. Spreadsheets originated
in a business and accounting environment, but their usefulness has extended
to many different disciplines including chemistry and other natural sciences.
There are basically two types of spreadsheets – the manual
spreadsheets and electronic spreadsheet. The manual spreadsheets are
typically ledger where you draw tables and enter the required data into it. On
the other hand, the electronic spreadsheets are computer programs that also
comprise of rows and columns.
We can think of spreadsheets as electronic ledgers that are used to
record, manipulate and plot data, knowing how to use spreadsheets will be a
very useful skill in out future data processing activities. We can also use
spreadsheets as a programmable calculator in doing homework problems.
There are currently many high powered spreadsheets that have good
graphical and presentational capabilities. These includes programes such as:
Lotus 1-2-3
Quattro Pro
MS-Excel
Wingz and Integrated packages such as Microsoft works and Claris
Works.
Worksheets and Workbooks :
A worksheet is a primary document that we can use to store and work
with the data. It consists of columns and rows. It is also called as
spreadsheet. A workbook is a file in which we work and store the data. Each
workbook can contain multiple worksheets. This helps us in organizing
different types of related information in a single file.
The names of the worksheets appear on the tabs at the bottom of the
workbook window. To move from one sheet to another, click on the desired
worksheet tab. The name of the active worksheet is highlighted as bold.
Creating workbooks and worksheet with MS-Excel :
MS-Excel is a spreadsheet developed by Microsoft. An Excel worksheet
is the main document used in Microsoft Excel to store and work with data.
The Excel worksheet is a rectangular grid, which has 256 columns and 16,384
rows.
Creating Microsoft Excel Worksheet :
1. Click on the start button. The start menu opens up.
2. Click on programs. A submenu opens up there.
3. Click on Microsoft Excel.
Creating MS Excel Workbook :
>> On the standard tool
The Excel Screen
When Excel is first started, you see worksheet called sheet1, which is
actually contained in a document window in maximized to fill the entire
available areas.
No.
Name
Description
1
Title bar
The title bar displays the documents title. You can
drag the title bar to move the window
2
Menu bar
The menu bar appears at the top of the screen and
offers access to Excel’s commands.
3
Standard tool bar
The standard tool bar offers buttons for formatting
many basic excel commands
4
Formatting tool bar the formatting tool bar offers buttons for formatting
commands
5
Formula bar
The formula bar displays the contents of the active
cell, as well as that cell’s address or reference
6
Worksheet window
The worksheet window is where you will do most of
your work with excel
7
Cell pointer
The cell pointer is a heavy or colored bordered
surrounding the active cell
8
Column headings
Column headings are the alphabetical labels that
appear at the top of the column
9
Row headings
Row headings are the numbered labels that appear
on the left side of each row
10
Scroll bars
Scroll bars chalde you to shift the window’s contents
to view different parts of the document
11
Sheet tabs
Each Excel documents has one or more sheets
combined together in a workbook
12
Status bar
The status bar displays information about the
document.
Creating a New Workbook :
On the standard tool bar, click the New button OR, Press Ctrl + N OR,
From the file menu, choose new.
If you choose new from the file menu, click workbook on the general
tab in the new dialog box. Click a template on spreadsheet
A workbook consists of one or more worksheets, which usually
conform to a standard design of rows and columns of data. Most worksheets
have heading at the top of columns and at the left ends of rows and
calculations at the bottom of columns and/or at the right ends of rows.
Entering Data into the Cells :
1. Click on the cell where you want to enter data.
2. Type in the data, data may be text, number of formulas.
3. Then move on the next cell for entering data if needed.
Saving an Excel Sheet :
Once your data entry in an Excel Sheet is over, you can save it for
future use. The steps involved in saving an excel sheet, are as follows:
1. Click on file in the menu bar, the file menu drops down.
2. Click on save as, the save as window open up.
Working with Numbers :
Numbers can be entered into the cells. Once the numbers are entered
you can perform any arithmetic operation such as addition, multiplication,
subtraction and division. Numbers can be integers or real numbers. When
entering a mathematical formula, precede the formula with the = sign. The
following operation can be used to indicate the type of calculation you want
to perform.
Operator
Operations
+
Addition
-
Subtractions
*
Multiplication
/
Division
Addition Operation :
1. Place the cursor on cell A1.
2. Type 10
3. Press enter key
4. Type 20 in cell A2
5. Press enter key
6. Type “=A1+A2” in cell A3.
7. Press the enter key
8. Note that the data of cell A1 has been added to the value of cell A2
and the result, will be shown in cell A3.
Subtraction Operation :
1. Press the F5 key. The GOTO dialog box will appear.
2. Type B1 in the dialog box which is indicated as reference.
3. Press the enter key
4. The cursor should move to cell B1.
5. Type 46 in cell B1.
6. Pres the enter key
7. Type 27 in cell B2.
8. Press the enter key
9. Type ‘=+B1-B2” in cell B3.
10. Press enter key
11. Note that cell B1 has been subtracted from B2 and the result is
shown in cell B3.
Microsoft Excel has some predefined formulas which can be used to
perform some specific operations such as.
1. Finding the sum of given numbers
2. Finding the Average of a set numbers
3. Finding Maximum of given numbers
4. Finding Minimum of given numbers.
Modifying the worksheet layout :
We can modify the worksheet in so many ways for example adjusting
the standard column width, all alignment. Adding bold, underline and Italic.
Changing the Font and font size, deleting a cell entry moving to a new
worksheet etc. some of these are explained below.
Adjusting the Standard column width:
Sometimes we need to change the standard column width to meet our
data entry requirement. To make the change follow these steps.
1. Click on format, which is located on the menu bar.
2. Press the down arrow key until column is highlighted.
3. Press the enter key
4. Press the down arrow key until standard width is highlighted
5. Press enter key
6. Type 20 in the standard column width field.
7. Click on OK. The width of every cell on the worksheet should now
be set to 20. You can see the change in the column width before
and after.
Cell Alignment :
Look at the cell A1. The name Ravindra is aligned with the left side of
the cell. Now, you can change the cell alignment to the center or to the right.
Center Alignment :
To bring the name Ravindra to the center of A1, follow these steps.
1. Move the cursor to the cell A1.
2. Click on center icon which is located on the formatting tool bar.
3. The name Ravindra should now be centered
Similarly, we can align the name Ravindra to the right.
Adding Bold Underline Italic :
You can Bold, Underline or Italicize text in your Excel worksheet. You
can also combine these features. That is, you can Bold Underline and Italicize
the given piece of text. These facilities can be achieved by using the
formatting tool bar.
Deleting a Cell :
To delete any information entered in a cell or a group of cells you place
the cursor in the cell or highlight the group of cells and press the delete key.
Moving to a New Worksheet :
In MS-Excel, each workbook is made up of several worksheets. To
move to the worksheet2 just click on sheet 2, which is located in the lower
left corner of the screen.
Printing from Worksheet :
The following are the steps in printing from worksheets is as follows :
Step 1 :
First you have to set the page setup of the worksheet.
Step 2 :
Next you have to select the margin of the top, bottom, right and
left side of the worksheet files.
Step 3 :
When you are making worksheet files you have check whether it
is portrait or landscape .
Step 4 :
When you complete the worksheet file setup again you have to
see the print preview in the worksheet file.
Step 5 :
Print preview allows you to adjust the rows, columns and
margin setting in worksheet file easily.
Step 6 :
Lastly, the work of printing from the worksheet can be taken
from the printer.
Word Processing :
Introduction :
A word processor is a software package which helps you enter text into
a computer from the key board. We mainly use word processing for letter
typing, preparing mailing lists, creating documents and reports. Word
processing software has reformed the way we create text based documents.
Through a word processor you can create, modify, store, retrieve and print
partly or fully a document.
Types of Word Processors :
There are many types of word processing software packages available:
 Wordstar
 Word perfect
 Professional write
 MS-word
Introduction to Word 2000 :
Microsoft word 2000, a popular word processing software, is part of a
suite of application programs developed by Microsoft called office 2000.
Starting Word 2000 :
There is more than one way of staring word 2000. you can do it by any
of the following methods.
 By using start button
 By using short cut on the desktop
The easiest way to start word 2000 is to click start >> programs >>
Microsoft Office >> Microsoft Word.
Word Window :
Word is built around a set of interactive windows rectangular, on
screen boxes through which you communicate with the word programs and
create you documents.
Let us understand these options one by one.
Title Bar :
The initial row at the top of the window is the tile bar, which shows the
name of the programs, MS-word followed by documents name.
Menubar :
Below the title bar is the menu bar. The menu bar contains all the
procedures you will need for working with word. If you click on one of the
menu items a drop down menu appears.
Toolbar :
Below the menu bar are the toolbars, which are rows of buttons with
graphic symbols or icons. The buttons on the tool bar represents the
command or the procedure. By default the standard tool bar (top) and
formatting tool bar (bottom) will be displayed.
Rule bar :
The ruler bar is displayed by default and appears below the toolbars. It
is used to set the tabs, idents and margins for a document.
Status Bar :
The status bar is seen at the bottom of the word window. This bar will
always show you your current position as far as the text goes on the active
document.
Creating a new document :
The following are the ways to create a new document.
1. Click the new document button on the standard tool bar.
OR
2. Choose file >> New from the menu bar OR
3. Within the new dialog box click on a blank document in general
tab, then click OK. OR
4. Press Ctrl-N on the keyboard
Saving Documents :
The ways to save a document are
1. Choose on the save button of standard tool bar OR
2. Choose file >> save from the menu bar.
When you are entering the name of the file in file name text box in
save as dialog box and by clicking on save button the file will be saved.
Exiting Word :
The ways to quit a word application
1. From the file menu, choose exit OR
2. Click close button in title bar.
Software Packages for Accounting :
Financial accounting software are used to store and maintain daily
business transactions like purchases, sales, receipts, payments, purchase
returns, sales returns, deposits and with drawls etc.
Starting Tally :
Introduction to Tally :
Tally is one of the most popular software package, TALLY is the one
software which has originated from our own country – INDIA.
TALLY does tally or tallying the things. It is basically used as
accounting software but it can also do more than that. Tally can do financial
accounting as well as physical accounting.
A very important feature of Tally is that it does not require any coding
there by making it easy to handle. It facilitates the account keeping in the
same traditional manner as manual accounting.
Starting Tally :
Like all installed software there would be an icon for TALLY created on
the computer. For starting TALLY position the cursor on the icon and double
click the left button on the mouse. Tally is operated in windows environment.
For windows environment refer to windows 98/2000 of Asian Publisher.
The Screen displays three areas :
Gateway of Tally :
This area is actual work area to use menus and work on reports etc.
this area can be activated by clicking in the box area or by Ctrl + m.
Direct Command Area :
Using mouse for commands in TALLY is like in any other software, but
unique feature of this software is that you can execute all the commands in
English language by typing in this area such as – cancel – This area can be
activated by clicking in this area or by pressing Ctrl + N.
Function Buttons :
Through this area by selecting button you can perform various
functions like change, backup etc.
Creating Company and Starting Accounts :
For creating new company activate the Gateway of Tally area by
clicking in this area or by pressing Ctrl+M and select create company from the
company into menu by double clicking or pressing C. This takes us to the next
screen company creating screen where basic information as detailed is to be
entered into.
It contains the company name, address, income tax number, local
sales tax number, interstate sales. Tax number, maintain (accounts only,
accounts cum inventory only) financial year from, books beginning from. Use
security number. All these information is to be filled according to the
particular company.
The screen which is below the company creating screen is Basic
Currency Information. Here it contains Basic Currency symbol, number of
decimal points, show amount in millions, is symbol suffixed to the amount,
put a space between the amount and symbol.
Gateway of Tally main menu:
The menu is for the option to maintain both the accounts and
inventory.
Accounts Info :
Under this head you can process items relating to financial accounts.
You can create masters like ledgers, cost centres, cost of inputs and outputs
item wise, other cost categories etc and update and maintain them.
Inventory Info :
Under this head you can process items relating to inventory
information such as number of items in stock, stock groups, stock categories
units etc. Here again the information can be updated and maintained.
Voucher Entry :
This head is perhaps most used item and enables you to enter daily
invoice and voucher information.
Balance Sheet :
Under this head the balance sheet is maintained up to the last voucher
entry.
Profit and Loss Account :
This head enables you to look at gross profit/loss and net profit/loss
upto date.
Stock Summary :
Under this head the stock position as updated can be seen.
Display :
In this all reports, both financial and inventory like statement of
accounts, statement of inventory, cash flow inventory book etc can be seen.
Multi Account Printing:
This head allows printing account books, inventory books etc.
Quit :
This item on menu allows you to quit Tally.
Functional Buttons :
A set of buttons are displayed on the extreme right of the screen in
Gateway of Tally.
These buttons enable you to perform various functions as detailed
below :
F1 :
Select company with this button you can select another company and
add to the list of selected company.
Alt+F1:
Shut company with this buttons you can sheet a selected company.
F2 :
Change date when entries for a company are completed change the
date by pressing this button
Alt + F2 :
Chg period : With this financial accounting period can be changed
F3 :
Chg cmp : When you want to change the company you are working
with another in the list of selected companies you press this button.
Alt + F3 :
Create cmp : when you choose this option the company info is brought
up to enable you to create another company.
F4 :
Back up : This gives the chance of having a backup of the company
information on Disk.
Alt + F4 :
Restore: Through this option you can retrieve the information from the
back up provided.
F11 :
Features : Through this button several additional features are provided
in Tally.
List of Accounts :
Voucher Entry :
Voucher entry records all the details of a transaction and since every
transaction is recorded voucher entry becomes one of the most frequently
used area. To start making voucher entries begin by electing voucher entry
and pressing the enter key in Gateway of Tally or Press the V key, the
voucher creating screen appears.
On the right side of the screen as you know, help buttons, displaying
their functions as below in the company maintaining both accounts and
inventory on Tally.
With these function buttons we can get the different vouchers like
contravoucher, payment voucher, receipt voucher, journal voucher, sale
voucher, purchase voucher, memo voucher, inventory vouchers like stock
journal, goods out, goods in, physical stock voucher and with some other
functions buttons we can change date, change company, change the
features, configure each voucher.
Windows Based Business Accounting Package :
Tally software has been the most popular accounting packages of all
the accounting packages that are available.
The latest available version of tally is Tally 9.
Some of the characteristics of the tally packages are as follows :
1. User Friendly : It is user friendly because the informations are clearly
visible on the screen. Users need very little training to operate. Tally
contains almost all packages in built.
2. Open Data Base Connectivity (ODBC) : The accounting tally is
connected to the MS Word, MS Excel, Oracle, MS Foxpro etc. This
helps to prepare necessary reports.
3. Import/ Export : Accounting tally helps to utilize the data from other
software applications by import and it has also got a system to export
data to other formats such as SDF, ASCLL.
4. Receivable/Payable : In accounting tally billwise details are maintained
so the amount receivable from the customers and the amount payable
to suppliers can be understood easily and the information is related to
these can be sent to customer to remind about their dues and to
inform the suppliers in respect of their due amount.
5. E-Capability : Accounting tally has got a feature of sending E-mails and
browsing the web for information.
6. Budgets and Controls : Tally has also got a system to prepare budgets
for the future plan of actions.
7. Ratio Analysis : Accounting tally will support us in understanding a
performance through ratio analysis. The various ratio provided by the
Tally enables the management in taking the useful decisions.
8. Multi Currency : In these days due to globalization the transactions will
take place between various countries. So conversion of currency value
to other currency is essential which arrangement is there in the Tally
System. It adjust profit or loss due to exchange rates.
OUT SOURCING ACCOUNTING PROCESS :
Accounting is an important part of the business. But there are still
more important things like, production, product innovation, sales etc on which
companies feature stands. So instead of concentrating on process of
accounting, they entrust this duty to some other companies specialized in
accounting process.
Meaning : Out sourcing is a process of entrusting our duties to some other
organization specialized in the particular filed. Accounting out sourcing is an
act of entrusting accounting duties to a specialized organization by which
company will save time money and efficiency.
Accounting outsourcing will reduce the operating expenses and helps
in getting accounting experts services. Outsourcing leads to correct pattern of
accounting system with full responsibility.
Advantages of Outsourcing Accounting :
1) It saves operating expenses
2) It reduce the number of employees in organization.
3) It reduce the training cost on accounting personnel.
4) It reduce the cost of office (accounting) equipment.
5) It helps to have accurate accounting.
6) It support to have expert accountants service.
7) It helps to have update new technology, new practice and new
tools.
8) It helps to have reports in time.
Questions :
Section –A (Questions carrying 2 marks)
1.
What do you mean by computerized accounting?
2.
What is manual accounting?
3.
State any two features of computerized accounting?
4.
Give any two advantages of computerized accounting?
5.
Mention any two disadvantages of computerized accounting?
6.
What is information?
7.
What is data?
8.
What is a file?
9.
Distinguish between data and information.
10. What is a workbook?
11. What is binary number system?
12. Give the steps in data processing system.
13. What is decimal number system?
14. Expand BCD?
15. State any two types of files.
16. What is database?
17. What is database management system?
18. Mention two advantages of database management system?
19. What is spreadsheet?
20. What is word processing?
21. What is font?
22. What is sales entry?
23. What is a receipt entry?
24. What is payment entry?
25. What is a contra entry?
26. What is an account package?
27. What is tally?
28. What is flowchart?
29. What is a voucher entry?
30. What is a voucher accounting?
31. What is transaction processing?
32. What do you mean by out sourcing?
33. Mention any two advantages of out sourcing.
Section – B (Question carrying 5 marks) :
1.
Distinguish
between
manual
accounting
and
computerized
accounting.
2.
What are the merits and demerits of computerized accounting.
3.
What are the steps involved in data processing system.
4.
Explain the importance of operations of data processing.
5.
What is word processing? Mention its features.
6.
Give brief explanation on various voucher entries.
7.
Mention the features of Tally package.
8.
Mention the various computer files.
9.
Mention the uses of spreadsheet.
10. Explain the components of worksheet.
11. What is a flowchart? Draw flow chart to find the sum of two
numbers.
12. Mention the procedure of using database management system.
13. Explain data representation.
14. Explain about the working of computer in accounting.
15. Write the roll of computer in accounting.
16. What is out sourcing? Write down the advantages of out sourcing.
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