chapter, we shall discuss the nature of computrised

Accountancy Computerised Accounting System I n chapter , you have learnt about the need for use of computers in accounting the nature and use of accounting information system. In this chapter, we shall discuss the nature of computrised accounting system, its advantages, limitations and sourcing. . Concept of Computerised Accounting System A computerised accounting system is an accounting information system that processes the financial transactions and events as per Generally Accepted Accounting Principles (GAAP) to produce reports as per user requirements. Every accounting system, manual or computerised, has two aspects. First, it has to work under a set of well-defined concepts called accounting principles. Another, that there is a user-defined framework for maintenance of records and generation of reports. In a computerised accounting system, the framework of storage and processing of data is called operating environment that consists of hardware as well as software in which the accounting system, works. The type of the accounting system used determines the operating environment. Both hardware and software are interdependent. The type of software determines the structure of the hardware. Further, the selection of hardware is dependent upon various factors such as the number of users, level of secrecy and the nature of various activities of functional departments in an organisation. LEARNING OBJECTIVES After studying this chapter, you will be able to : • define a computerised accounting system; • distinguish between a manual and computer- ised accounting sys- tem; • highlight the advanta- ges and limitations of computerised account- ing system; and • state the sourcing of a computerised account- ing system. © NCERT not to be republished