NCERT Solutions for Class 11 Accounts : Application of Computer in Accounting

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 12 – 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 “Chapter 12 : Application of Computer in Accounting“

NCERT solution for Class 11 Accountancy Chapter- 12 Applications of computers in accounting describes the computer system first and then the manual system of records and also the difference between a computer system and a manual recording system of finances. The advantages of a computer based accounting system and a manual recording system is clearly defined and then the different examples of transaction processing system are explained.

Question 1:

State the different elements of a computer system.

Answer:

These 6 elements comprise a computer system

1. Hardware: It consists of the physical modules that make up a computer. Examples are Processor, Monitor, Keyboard, Mouse, etc. The primary function is to receive input commands.
2. Software: This refers to a set of programs that helps a computer perform basic tasks and commands as provided by the user. Two main categories of software are a) System software b) Application Software
3. People: This element comprises individuals or users that communicate with the system by using software and hardware.
4. Data: The text, numbers, and graphics are pieces of information and are known as data in computer parlance.
5. Procedures: It refers to those operations that are designed to be executed in an orderly manner to produce the desired result. It can be of three types: hardware-oriented, software-oriented and internal.
6. Connectivity: How a computer system gets connected with other devices like phones, printers, modems, etc. by different technologies such as the internet, Bluetooth, or Wi-Fi is called connectivity.

Question 2:

List the distinctive advantages of a computer system over a manual system.

Answer:

The following advantages are there:

1. Accuracy
2. Storage capacity
3. High Speed
4. Versatility
5. Reliability

Question 3:

Draw a block diagram showing the main components of a computer. 

Give three examples of a Transaction Processing System.

Answer:

A computerized system that is useful in recording, processing, storing, and validating routine transactions that take place in a business on a day-to-day basis is known as a transaction processing system. Some well-known examples are:

1. Payroll Applications: Such applications process transactions with the help of online and terminal processes. The most common uses of such systems are for payroll preparation or processing employee salary.
2. Order Processing: Here orders get processed to proceed with invoicing, inventory control, and account receivables. Order details are received from emails, phone calls, or by manual input. This system is used worldwide for online booking for hotels, flights, etc.
3. ATM (Automated Teller Machine): These devices manage high-volume transactions using sophisticated technology.

Question 4:

State the relationship between Information and Decision. 

Answer:

An organization comprises different types of units involved in decision-making. Every department takes individual decisions to attain the preferred common objectives of the organization. An organization needs to draft plans, set common targets, and devise policies. All these events are established on the information (data) which is derived from experience and anticipated future conditions. Based on such information, an organization allocates resources and works towards achieving targets. Therefore, it can be said that information helps in decision making, and previously taken decisions create a source of information in the future.

Question 5:

What is Accounting Information System?

Answer:

An information system that requires the collection, storage, and processing of accounting and financial data that can be used by internal users to communicate information to shareholders, creditors. It uses a computer-based method for recording accounting information based on accounting principles. The information is recorded in such a way that it can be retrieved for decision-making by the internal management. It can include items such as a simple ledger to other complex items like costing, financial reports.

Question 6:

State the various essential features of an accounting report.

Answer:

An accounting report should contain these essential features

1. Relevance
2. Timeliness
3. Accuracy
4. Completeness
5. Conciseness

Question 7:

Name three components of a Transaction Processing System.

Answer:

Transaction processing system comprises of these three components:

1. Input: It consists of source documents such as invoices, purchase orders that act as inputs to the system.
2. Storage: The system stores the fed data in the portable storage system in the form of a hard disk.
3. Output: The data that is stored can be retrieved and used to study as and when such a need arises.

Question 8:

Give an example of the relationship between a Human Resource Information System and MIS.

Answer:

MIS is an organized system that collects, processes, stores and disseminates data as information to help in decision making. The function of HRIS is to maintain employee records and prepare documents related to salaries and wages payable to employees. In an organization, HRIS supplies essential information related to employees such as skills, qualifications, experiences, and MIS utilizes this information to take suitable decisions such as which department to allot, promotion, and increment of employees.

Long Questions

Question 9:

An organization is a collection of interdependent decision-making units that exists to pursue organisational objectives. In the light of this statement, explain the relationship between information and decisions. Also explain the role of Transaction Processing System in facilitating the decision-making process in business organisations.

Answer:

An organization comprises of different types of units involved in decision making. Every department takes individual decisions to achieve the desired shared objectives of the organization. An organization needs to draft plans, set common targets, and devise policies. All such activities are based on the information (data) which is derived from experience and anticipated future conditions. Based on such information, an administration assigns resources and works towards achieving targets. Therefore, it can be said that information helps in decision making, and previously taken decisions create a source of information in the future.

Transaction processing systems are an important part of business operations. They are involved in the processing of transactions of a business. The different processes involved are:

1. Collecting Data: The role of TPS is to collect data which may be in the form of manual entry, point of sale machines, and scanners.
2. Editing Data: Checking the data for the correctness, accuracy
3. Validation of Data: Verifying data and rectifying errors if detected.
4. Manipulating Data: Processing and analyzing data based on pre-designated design.
5. Storage of Data: The process of storing data so that it can be accessed anytime.
6. Report Generation: This involves creating reports and presenting data in a designated format which can either be hardcopy or softcopy.
7. Query Support: It refers to users of TPS who can raise a query and extract the same data to get a meaningful report.

Question 10:

Explain, using examples, the relationship between the organisational MIS and the other functional information system in an organisation. Describe how AIS receives and provides information to other functional MIS.

Answer:

MIS is an information system that generates and analyses reports to provide accurate and timely reports to management which will be used to make decisions.

AIS is an information recording system that is maintained by a business for identifying, collecting, processing, and generating information about business organizations and presenting the same information to different users of the information.

AIS maintains a relationship with other information systems such as HRIS, Marketing Information System, and Manufacturing Information System.

We know that an organization has several departments for pursuing different types of functions to ensure the smooth functioning of the business. For example, AIS or accounting information system takes care of finance-related decisions while the HR department is responsible for maintaining employee records and preparing payroll and salary structure for the employees. Similarly, qualifications, skills, and experience are supplied by the HR department to be used by the manufacturing department and allot them accordingly.

Similarly, the manufacturing department prepares the list of items based on the requirement, and the accounting department processes the order. Therefore it can be seen that AIS has relations with all the departments of an organization.

Question 11:

 ‘An accounting report is an essential report which must be able to fulfil certain basic criteria’. Explain? List the various types of accounting reports.

Answer:

Data manipulated and processed in a way that is grasped by the user without any complexity becomes information. This information is further refined to create a report. Content and the report design depend upon the management level at which it gets submitted. Decisions are taken based on the reports prepared. An accounting report must fulfill the following criteria:

1. Accuracy
2. Relevance
3. Completeness
4. Timeliness
5. Summarisation

Following types of reports are seen in accounting

1. Demand Reports: These are the reports that are prepared on the managements’ needs and requests. Money report. Eg: Money report.
2. Summary Reports: Reports which summarise the activities happening in an organization. Example, Profit and Loss Account.
3. Customer/Supplier Reports: Reports prepared as issued by management detailing various information of suppliers. Example: Report of 5 best customers.
4. Responsibility Reports- Reports prepared by managers responsible for individual departments. For example, Purchase Manager submits a report regarding different aspects of the purchase.
5. Exception Reports: Reports prepared with a purpose containing conditions and exceptions. Inventory Status Report.

Question 12:

Describe the various elements of a computer system and explain the distinctive features of a computer system and manual system.

Answer:

These 6 elements comprise a computer system

1. Hardware: It consists of the physical modules that make up a computer. Examples are Processor, Monitor, Keyboard, Mouse, etc. The primary function is to receive input commands.
2. Software: This refers to a set of programs that helps a computer perform basic tasks and commands as provided by the user. Two main categories of software are a) System software b) Application Software
3. People: This element comprises individuals or users that communicate with the system by using software and hardware.
4. Data: The text, numbers, and graphics are pieces of information and are known as data in computer parlance.
5. Procedures: It refers to those operations that are designed to be executed in an orderly manner to produce the desired result. It can be of three types: hardware-oriented, software-oriented and internal.
6. Connectivity: How a computer system gets connected with other devices like phones, printers, modems, etc. by different technologies such as the internet, Bluetooth, or Wi-Fi is called connectivity.

Distinguishing features of computer and manual system are:

1. Accuracy- Calculations and operations performed by a computer system are very accurate. Errors are detected due to the wrong input of data or wrong commands by the user. In a manual system, the results created by humans are prone to more errors.
2. Speed- The computer performs calculations faster as compared to the human brain. It executes tasks in a faster way than a manual system.
3. Reliability: A Computer can work on any condition and are very reliable as compared to human beings.
4. Versatility: The computer is created to perform a variety of tasks simultaneously, whereas human beings cannot match that speed and versatility.
5. Storage: All computers are having storage capacity to store all the information and this information can be accessed anytime, anywhere. In manual system storage of documents is cumbersome and takes a long time.