Friday, 20 July 2012

Components of Advanced Computerized accounting software:

Accounting software is application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll, and trial balance. It functions as an accounting information system. It may be developed in-house by the company or organization using it, may be purchased from a third party, or may be a combination of a third-party application software package with local modifications. It varies greatly in its complexity and cost.
So in Banking System there have been some component of their computerized software which are listed as below
1. Preparation of accounting documents
Computer helps in preparing accounting documents like Cash Memo, Bills and invoices etc., and preparing accounting vouchers.
2. Recording of transactions
Every day business transactions are recorded with the help of computer software. Logical scheme is implied for codification of account and transaction. Every account and transaction is assigned a unique code. The grouping of accounts is done from the first stage. This process simplifies the work of recording the transactions.
3. Preparation of Trial Balance and Financial Statements
After recording of transaction, the data is transferred into Ledger account automatically by the computer. Trial Balance is prepared by the computer to check accuracy of the records. With the help of trial balance the computer can be programmed to prepare Trading, Profit and Loss account and Balance Sheet. These components can be shown as:

Transaction processing system: (TPS) is the first stage of computerized accounting system. The purpose of any TPS is to record, process, validate and store transactions that occur in various functional areas of a business for subsequent retrieval and usage. TPS involves following steps in processing a transaction: Data Entry, Data Validation, Processing and Re-validation, Storage, Information and Reporting. It is one of the transaction processing systems which is concerned with financial transactions only. When a system contains only human resources it is called manual system; when it uses only computer resources, it is called computerized system and when it uses both human and computer resources,
it is called computer-based system. These steps can be explained with an example making use of Automatic Teller Machine (ATM) facility by a Bank-Customer.

1. Data Entry: Processing presumes data entry. A bank customer operates an ATM facility to make a withdrawal. The actions taken by the customer constitute data which is processed after validation by the computerized personal banking system.

2. Data Validation: It ensures the accuracy and reliability of input data by comparing the same with some predefined standards or known data. This validation is made by the ‘Error Detection’ and ‘Error Correction’ procedures. The control mechanism, wherein actual input data is compared with predetermined norm is meant to detect errors while error correction procedures make suggestions for entering correct data input.
The Personal Identification Number (PIN) of the customer is validated with the known data. If it is incorrect, a suggestion is made to indicate the PIN is invalid. Once the PIN is validated, the amount of withdrawal being made is also checked to ensure that it does not exceed a prespecified limit of withdrawal.

3. Processing and Re-validation: The processing of data occurs almost instantaneously in case of Online Transaction Processing (OLTP) provided a valid data has been fed to the system. This is called check input validity. Re-validation occurs to ensure that the transaction in terms of delivery of money by ATM has been duly completed. This is called check output validity.

4. Storage: Processed actions, as described above, result into financial transaction data i.e. withdrawal of money by a particular customer, are stored in transaction database of computerized personal banking system. This makes it absolutely clear that only valid transactions are stored in the database.

5. Information: The stored data is processed making use of the Query facility to produce desired information. 

6. Reporting: Reports can be prepared on the basis of the required information content according to the decision usefulness of the report.
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Jamie said...

Accounting software decreases manual work and it allows for the reduction of a business’ full-time staff. Since some accounting works are automated, a full-time accountant is not necessary any longer. The recording of transactions, the preparation of trial balance and financial statements, and the preparation of accounting documents have become less erroneous due to the computerized accounting processing system.

Jamie Shellman

Darcy Grubaugh said...

The best component for me is the capability of the accounting software to prepare accounting documents. Preparing everything, from legal papers to receipts, is the simplest way to handle finances, and using accounting software makes it easier and puts you in control. You can keep track of the process through the software’s functions, and if you need a copy of it, you can just get it from there. It would be pretty handy when it comes to paying taxes because everything you need is already prepared and organized.

@Darcy Grubaugh

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