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 between manual accounting and computerized accounting

Manual accounting Computerized accounting1) Process of work consumes more time

1) Process of work consumes very less time

2) Human is subject to commit mistake

2) Computer works accurate and reliable

3) Human being cannot work continuously

3) Computer can work continuously

4) Manual records are not subject to manipulation

4) Computer records are subject to risk to manipulation

5) Manual accounting requires continuous recording from beginning to the preparation of financial accounts

5) Computer accounts requires only beginning records, then it generates final accounts of any other reports automatically

6) Manual accountings are visible

6) Computer records are not easily visible

7) Computer knowledge is not required

7) Computer knowledge is necessary

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 a is large

Print B is large

Stop

Ex: Write a flow chart to find the simple interest.

ACCOUNTING FLOW CHART

Key to symbolsCash Flows Accounting Flows

Legal

Claims by the Entity

DebitAmoun

ts Claime

d Tangible Assets

DebitIncrease

s in Assets

CreditAmoun

ts Settled

CreditDecreas

es in Assets

Legal

Claims against the Entity

DebitAmoun

ts Settled

OGains and

Losses(Income

and Expenditur

e)

DebitLosses

or Expense

s

CreditAmoun

ts Claime

dCredit Gains or

Income

Cash Flows

start

Input P,T,R

S=PTR/100

Print S

Stop

1. Cash purchase – Stock (Inventories)

8. Investment Withdrawl

2. Cash Sales or Revenue Income 9. Cash Expenses 3. Cash Settlement – Creditors (Payables)

10. Investment of Cash in Monetary Instruments

4. Cash Settlement – Debtors (Receivables)

11. Loan Repayments

5. Dividends or Share (Stock) Repayment

12. Loans Raised

6. New Share Capital 13. Capital Expenditure 7. Payment from Funds 14. Sales Fixed Assets

Accounting Flows 1. Use of stocks (Inventories) 15. Capital Repayable 2. Sales Income 16. Surplus on Investments

(Credited as Income) 3. Expenses (Trading, Operations, Manufacturing)

17. Future Income or Corporation Tax (Provision)

4. Revenue (Recurrent) income 18. Extra Ordinary losses 5. Credit Purchases 19. Expenses Paid in Advance 6. Cash Discount Received 20. Surplus on Investments

(Credited as Capital) 7. Gross Profit (Trading, Operations, Manufacturing)

21. Bad Debts or Discounts Allowed

8. (Sales & Operational) income recoverable

22. Transfer of Expenses

9. Taxes now payable 23. Accrued expenses 10. Expenses (Profit and Loss or Income and Expenditure)

24. Transfers to Special Fund / Provision for expenses

11. Net Loss or Net Expenditure 25. Investment Losses 12. Net Earnings or Net Income 26. Depreciation (Commercial or

Enterprise Accounts) and Capital Discharged – by Loans repaid, revenue contributions to capital or special funds applied (Muncipal Public sector accounts)

13. Allocated or declared dividends 27. Revaluation of fixed assets 14. Transfers to reserves 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 knowledge3. 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 1-2-3Quattro 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 Column headings are the alphabetical labels

headings 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 key9. 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 numbers2. Finding the Average of a set numbers 3. Finding Maximum of given numbers4. 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

highlighted5. 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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