NCERT Solution For Class 11 Accountancy – Computerised Accounting System

NCERT Solutions is said to be an extremely helpful book during the preparation of the CBSE Class 11 Accounting Exams. This study material has deep knowledge, and the solutions collected by the subject matter wizards are not separate.

NCERT Solution For Class 11 Accountancy Chapter 13 – Introduction to Accounting provides us with all-inclusive information on all concepts. As students would have to learn the basics about the subject of accounting in class 11, this curriculum for class 11 is a comprehensive study material, which explains the concepts in a great way.

Below you can find the NCERT solution for Class 11 Accountancy. You can get a Solution for the all-important question of “NCERT Solution For Class 11 Accountancy Chapter 13 – Computerised Accounting System“

NCERT solution for Class 11 Accountancy Chapter-13 Computerised Accounting System aims to guide about database application and its requirements, advantages of computerised accounting systems, and also the difference between ready-to-use and tailored accounting software. The definition of a computerised accounting system and its distinction from the manual operating system is explained briefly.

Question 1:

State the four basic requirements of a Database Application.

Answer:

The following are the four basic requirements of a Database Application.

1. Front-end Interface- It acts as an interactive connecting link between the user and the database-oriented software through which the user communicates or interacts with the back-end database.
2. Back-end Database- It is the data storage system that is hidden from the users. It responds to the requirement of the users to the extent the user is authorized to access.
3. Data Processing- It is a sequence of actions that are taken to transform the input data into useful information for taking various decisions.
4. Reporting System- It is an integrated set of objects that includes all the relevant information that constitutes a report.

Question 2:

Name the various categories of the Accounting Package.

Answer:

The Accounting Packages are classified into the following categories.

1. Ready-to-use or Readymade Software.
2. Customized Software
3. Tailored or Tailor-made Software.

Question 3:

Give examples of two types of Operating Systems.

Answer:

The following are the two types of Operating systems along with their examples.

1. Single-User Operating System, for example, DOS, Windows 95/97
2. Multi-User Operating System, for example, UNIX, LINUX

Question 4:

List the various advantages of Computerised Accounting Systems.

Answer:

The mentioned below are the various advantages of Computerised Accounting Systems.

1. Speed
2. Accuracy
3. Reliability
4. Up-to-Date Information
5. Real-Time User Interface
6. Automated Document Production
7. Scalability
8. Legibility

Question 5:

Give two examples each of the organizations where ‘ready-to-use, ‘customized’, and ‘tailored’ accounting packages respectively suitable to perform the accounting activity.

Answer:

‘Ready-to-use accounting packages are basically used by small-sized enterprises. For example, grocery stores, medical stores, etc.

On the other hand, ‘Customised’ accounting packages are basically used by medium and large businesses. For example, shopping malls, hospitals, etc.

Whereas, ‘Tailored’ accounting packages are basically used by geographically scattered businesses. For example, MNC’s, Communication Industries, etc.

Question 6:

Distinguish between ‘ready-to-use and ‘tailored’ accounting software.

Answer:

Question 7:

Define a Computerised Accounting System. Distinguish between Manual and Computerised Accounting Systems.

Answer:

Computerized Accounting Systems are based on the concept of database. It is an accounting information system that processes financial transactions and events in aby Generally Accepted Accounting Principles (GAAP) to produce reports as per the requirements of the users.

Computerized accounting is one of the database-oriented applications, wherein the transactions data is stored in a well-organized database. The accounting systems are of two types namely Manual and Computerised Accounting Systems.

The following are some points of difference between Manual and Computerised Accounting Systems.

Question 8:

Discuss the advantages of Computerised Accounting Systems over Manual Accounting Systems.

Answer:

The following are the various advantages of the Computerised Accounting Systems over the Manual Accounting Systems.

1. Speed- The speed of a computer is very high and takes very little time in performing various difficult operations. The accounting data is processed comparatively faster through the Computerised Accounting Systems than it can be done through manual efforts.
2. Accuracy- In Computerised Accounting Systems, the possibility of errors is minimized or reduced as the primary accounting data is entered only once for preparing various accounting reports and for subsequent usage and processes.

On the other hand, in Manual Accounting Systems, posting of same data is required numerous times to prepare different types of accounting reports. This increases the possibility of accounting errors.

3. Reliability- As the Computerised Accounting Systems is well-equipped in performing repetitive operations, so it is comparatively more reliable to perform the operations than the manual system. Also, the Computerised Accounting Systems overcome the limitation of Manual Accounting Systems such as tiredness, boredom or fatigue, etc., thereby enhances the degree of reliability.
4. Up-to-Date Information- In the Computerised Accounting Systems, whenever the new accounting data is entered and stored, the existing accounting records automatically get updated. For example, when a transaction related to purchasing of machinery is entered in the Computerised Accounting Systems, then automatically the cash balance and machinery balance on the Assets side of the Balance Sheet gets updated immediately. This ensures that the latest information is reflected in the accounting reports at any particular period of time.

On the other hand, the accounting records maintained under the Manual Accounting Systems fail to reflect the latest status. This is because it depends on the human mental capability and patience to update the records each time a transaction happens.

5. Real-Time User Interface- Most of the automated accounting systems are interlinked through a network of computers. The availability of information to various users at the same time on a real-time basis is facilitated under a computerized system of accounting. This is very difficult to avail such a facility under a manual system as this calls for the availability of multiple copies of the accounting records that can be accessed by many users at the same time.
6. Automated Document Production- Under Computerised Accounting Systems, the accounting reports such as Cash Book, Trial balance, Statement of Accounts, etc. are very easy to obtain. This is because most computerized systems have standardized and user-defined formats of accounting reports that are generated automatically. On the other hand, such ease cannot be enjoyed under a manual system. This is because the accounts books are prepared by different employees, thereby subjected to vary from person to person.
7. Scalability- The computerized systems of accounting are highly scalable as the requirement of additional manpower is mainly confined to data entry for recording and storing the additional vouchers in the computers. Thus, the additional cost of processing additional transactions is meager as compared to the cost associated with hiring new accountants to handle additional transactions.
8. Legibility- In Computerised Accounting Systems, the accounting records are typed and presented in standard fonts. The various characters especially numbers, alphabets, graphics, etc. are more clear and can be read without any difficulty and ambiguity. But, in the manual system, the writing of different personnel vary; consequently, reading and interpreting the written materials involves errors due to misinterpretation.

Question 9:

Describe the various types of accounting software along with their advantages and limitations.

Answer:

The various types of accounting software are:

1. Ready-to-use
2. Customized
3. Tailored

Ready-to-use Software- This type of software is readily available in the market with prescribed and standard features. This accounting software is basically used by small-size business enterprises, where the number of transactions is not so large. The cost of its installation and maintenance is also low. It has a limited number of users. Its adaptability is very high as it is relatively easier to learn and operate. It does not have a wide scope to link it with other information systems.

Customized Software- Customised software is software that has standardized features to meet the special requirements of the users. It provides the scope of changing the features of accounting software. The functions of this software can be programmed as per the needs and requirements of the users. This type of software best suits the needs of medium and large businesses. Its cost of installation and maintenance is comparatively higher. It can be easily linked to other information systems.

Tailored Software- Tailored or Tailor-made accounting software is the software that is developed as per the specifications and requirements of the users. This accounting software is generally used in large business organizations with multi-users and geographically scattered locations. It is designed to meet the specific needs of the users and form an integral part of the organizational MIS. It has an infinite number of users.

Advantages of Ready-made Accounting Software

The advantages of Ready-made Accounting Software are enlisted below.

1. This software is easily available in the market.
2. It is less expensive, as it comes with basic and standard features.
3. It involves a lesser need for training.
4. It is less sophisticated.
5. Its adaptability is very high as it is relatively easier to learn and operate.
6. It is suitable for small-size business enterprises.

Disadvantages of Ready-made Accounting Software

The disadvantages of Ready-made Accounting Software are enlisted below.

1. It has a limited number of users.
2. It is not suitable for medium and large business organizations, where the number of transactions is very large.
3. It fails to cater to the specific needs of the users.
4. It suffers from a low level of data secrecy.
5. It does not have a wide scope to link it with other information systems.

Advantages of Customised and Tailor-made Accounting Software

The following are the advantages of Customised and Tailor-made accounting software.

1. This software is suitable for medium and large business organizations.
2. It caters to the specific requirements and needs of the users.
3. It can be modified as per the needs of the organization.
4. It has a high level of security and minimizes the loss and unauthorized access of data.
5. It cannot be easily imitated or duplicated in the market due to differences in the needs and requirements of different users.
6. It does not involve the high cost of training as the training can be imparted within the organization by experienced personnel.
7. It can be easily linked to other information systems.
8. It forms an integral part of the organizational MIS.

Disadvantages of Customised and Tailor-made Accounting Software

The following are the disadvantages of Customised and Tailor-made Accounting Software.

1. It involves the high cost of installation and maintenance.
2. Developing customized software is a time-consuming process and involves a high cost of development.
3. Maintenance of this software is difficult as there exists limited availability of knowledge to the developers.
4. It lacks a standard training module.

Question 10:

‘Accounting software is an integral part of the Computerised Accounting Systems’ Explain. Briefly list the generic considerations before sourcing accounting software.

Answer:

The accounting software does form an integral part of the Computerised Accounting Systems. The accounting software should be selected after considering the level of skill and proficiency of the accounting professionals. This is one of the important aspects that should be taken care of before introducing Computerised Accounting Systems, as the accounting professionals are responsible for accounting and not computers.

The following are some of the important points that should be taken into consideration before introducing accounting software in an organization.

1. Flexibility- This is the most important factor that should be considered before sourcing accounting software. The accounting software should be flexible in terms of data entry, retrieval of data, and generating the design of reports. The software should be able to run on different computers having different operating systems and having different configurations. It should provide some flexibility among its users. It should also provide easy switch over between users, operating system, and hardware.

1. Cost of Installation and Maintenance- The selection of accounting software largely depends upon its cost to the organization. The cost of accounting software includes the cost of installing the related components and hardware, maintenance and alteration costs, cost of training the staff, and cost involved in recovering data in case of data failure. An organization needs to evaluate the benefits of the software against its costs. Based on its evaluation, an organization will introduce the software if the benefits are more than the cost and if it is in the affordable range of the organization.

1. Size of Organisation- The size of an organization also determines the selection of accounting software. Small-sized organizations, where the volume of business transactions is not so large, usually opt for simple and single user-oriented software. On the other hand, large-scale organizations, where the volume of business transactions is very large choose the latest and sophisticated software for meeting the multi-user requirements.

1. Training Needs- Another factor that affects the choice of software is the training needs. There is some accounting software that requires comparatively lesser training and is more user-friendly. While there is some other complicated software that requires continuous and thorough training.

1. Level of Secrecy- The level of expected security is one of the important factors that an organization bears in mind before sourcing accounting software. Software should be able to prevent unauthorized access and manipulation of data. It should have in-built features of security. For example, in tailored software, the user rights may be restricted according to their work or responsibility criteria.

1. Exchanging Data Facility- The capability of accounting software to transfer data is another important factor to be considered for its selection. The accounting software should be able to provide an easy and safe transfer of data from one system to another system and during the migration of the database.

1. Utilities/MIS Reports- Another factor that helps in determining the software selection is the MIS reports and the extent to which they are used in the organization.
2. Vendor Reputation and Capability- The selection of software is also affected by the capability and competence of the vendor. It depends upon the reputation of the vendor in the market, the user reviews of the similar software, the extent of post-sales support services from the vendors, etc.

Question 11:

‘Computerised Accounting Systems are the best form of accounting system’. Do you agree? Comment.

Answer:

Yes, we agree with this statement that ‘Computerised Accounting Systems are the best form of accounting system’. It becomes very easier to work with Computerised Accounting Systems leading to a reduction in accounting errors. Moreover, the computerized accounting reports are highly reliable, thereby enhances the overall efficiency.

Due to the following positive aspects, the Computerised Accounting Systems certainly enjoy an edge over the Manual Accounting Systems.

1. Speed- The speed of a computer is very high and takes very little time in performing various difficult operations. The accounting data is processed comparatively faster through the Computerised Accounting Systems than it can be done through manual efforts.
2. Accuracy- In Computerised Accounting Systems, the possibility of errors is minimized or reduced as the primary accounting data is entered only once for preparing various accounting reports and for subsequent usage and processes.

On the other hand, in Manual Accounting Systems, posting of same data is required numerous times to prepare different types of accounting reports. This increases the possibility of accounting errors.

3. Reliability- As the Computerised Accounting Systems is well-equipped in performing repetitive operations, so it is comparatively more reliable to perform the operations than the manual system. Also, the Computerised Accounting Systems overcome the limitation of Manual Accounting Systems such as tiredness, boredom or fatigue, etc., thereby enhances the degree of reliability.
4. Up-to-Date Information- In the Computerised Accounting Systems, whenever the new accounting data is entered and stored, the existing accounting records automatically get updated. For example, when a transaction related to the purchase of machinery is entered in the Computerised Accounting Systems, then automatically the cash balance and machinery balance on the Assets side of the Balance Sheet gets updated immediately. This ensures that the latest information is reflected in the accounting reports at any particular period of time.

On the other hand, the accounting records maintained under the Manual Accounting Systems fail to reflect the latest status. This is because it depends on the human mental capability and patience to update the records each time a transaction happens.

5. Real-Time User Interface- Most of the automated accounting systems are interlinked through a network of computers. The availability of information to various users at the same time on a real-time basis is facilitated under the computerized system of accounting. This is very difficult to avail such a facility under a manual system as this calls for the availability of multiple copies of the accounting records that can be accessed by many users at the same time.
6. Automated Document Production- Under Computerised Accounting Systems, the accounting reports such as Cash Book, Trial balance, Statement of Accounts, etc. are very easy to obtain. This is because most computerized systems have the standardized and user-defined format of accounting reports that are generated automatically. On the other hand, such ease cannot be enjoyed under a manual system. This is because the accounts books are prepared by different employees, thereby subjected to vary from person to person.
7. Scalability- The computerized systems of accounting are highly scalable as the requirement of additional manpower is mainly confined to data entry for recording and storing the additional vouchers in the computers. Thus, the additional cost of processing additional transactions is meager as compared to the cost associated with hiring new accountants to handle additional transactions.
8. Legibility- In Computerised Accounting Systems, the accounting records are typed and presented in standard fonts. The various characters especially numbers, alphabets, graphics, etc. are more clear and can be read without any difficulty and ambiguity. But, in the manual system, the writing of different personnel vary; consequently, reading and interpreting the written materials involves errors due to misinterpretation.