What Are the Usual Features, Advantages or Benefits And Examples Of Management Reports Obtained From A Computerized Accounting System.

October 14th, 2009 Comments off
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Question:I just joined a small company where it is in the midst of acquiring a computerized accounting system. May I know:-

(a)  What are the usual features that are available in such system

(b)  Advantages of a computerized accounting system

(c ) Give examples of some management reports which are automatically generated.

Answer:(a)     Some of the features that are available in a computerized accounting system includes the following:

  • On-screen input and printout of sales invoices
  • Automatic updating of customer accounts in the sales ledger
  • Recording of suppliers’ invoices
  • Automatic updating of suppliers’ accounts in the purchases ledger
  • Recording of bank receipts
  • Making payments to suppliers and for expenses
  • Automatic updating of the general ledger
  • Automatic adjustment of stock records
  • Integration of a business database with the accounting program
  • Automatic calculation of payroll and associated entries
  • Ability to import and export data ( e.g. import from excel spreadsheet to computerized system or vice-versa)
  • Able to allow direct emailing and faxing of accounting documents such as invoices and receipts to people directly from the program.
  • Ability to deal with multiple currencies

(b)     Main advantages or benefits obtained from having a computerized accounting system:

  • Accuracy – there is less room for errors as only one accounting entry is needed for each transaction rather than two (or three) for a manual system.
  • Up-to-date information the accounting records are automatically updated and so account balances (e.g. customer accounts) will always be up-to-date.
  • Speed – data entry onto the computer with its formatted screens and built-in databases of customers and supplier details and stock records can be carried out far more quickly than any manual processing.
  • Cost savings – computerized accounting programs reduce staff time doing accounts and reduce audit expenses as records are neat, up-to-date and accurate.
  • Management information – reports can be produced which will help management monitor and control the business, for example the aged debtors analysis will show which customer accounts are overdue, trial balance, trading and profit and loss account and balance sheet.
  • Automatic document production – fast and accurate invoices, credit notes, purchase orders, printing statements and payroll documents are all done automatically.
  • Availability of information – the data is instantly available and can be made available to different users in different locations at the same time.
  • GST/VAT return – the automatic creation of figures for the regular GST/VAT returns.
  • Legibility ­– the onscreen and printed data should always be legible and so will avoid errors caused by poor figures.
  • Efficiency – better use is made of resources and time; cash flow should improve through better debt collection and inventory control.
  • Staff motivation – the system will require staff to be trained to use new skills, which can make them feel more motivated.  Further to this with many ‘off-the-shelf’ packages the training can be outsourced and thus making a particular staff member less critical of business operations.
  • Reduce frustration – management can be on top of their accounts and thus reduce stress levels associated with what is not known.
  • The ability to deal in multiple currencies easily – many computerized accounting packages now allow a business to trade in multiple currencies with ease.  Problems associated with exchange rate changes are minimized.

(c )  Some major management reports generated from the computerized accounting system include the following:

  • Aged debtors’ summary – a summary of customer accounts showing overdue amounts
  • Account payables’ summary- a summary of creditors showing amount owing at due dates
  • Trial balance, trading and profit and loss account and balance sheet
  • Stock valuation
  • Sales analysis
  • Budget analysis and variance analysis
  • GST/VAT returns
  • Payroll analysis

Click below to see  other useful articles on computerized accounting system:

What are the advantages and disadvantages of computerized accounting systems
Comparison of the steps of an accounting cycle under the Manual system and under the Computerized system.
Internal Control in a Manual and Computerized Accounting Environment
Characteristic and difference between Batch And Online Processing.
Factors To Consider when buying a small business accounting software.
Question On Computerized Accounts.

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