ASSIGNMENT

COMPUTERIZED ACCOUNTING
5 marks
1. What is computer? Explain types of computer?
A computer is a machine that can be programmed to manipulate symbols. Its principal
characteristics are:
 It responds to a specific set of instructions in a well-defined manner.
 It can execute a prerecorded list of instruction (a program).
 It can quickly store and retrieve large amounts of data.

Types of computers

 Personal computer
 Workstation
 Mainframe
 Minicomputer
 Supercomputer

Personal computer:

A small, single-user computer based on a microprocessor. It can be defined as a small,

relatively in expensive computer designed for an individual user. In price, personal computers
range anywhere from a few hundred pounds to over five thousand pounds. All are based on the
microprocessor technology that enables manufacturers to put an entire CPU on one chip.
Businesses use personal computers for word processing, accounting, desktop publishing, and for
running spreadsheet and database management applications. At home, the most popular use for
personal computers is for playing games and recently for surfing the Internet. The IBM PC
quickly became the personal computer of choice, and most other personal computer
manufacturers fell by the wayside. P.C. is short for personal computer or IBM PC.
Workstation:

It is a type of computer used for engineering applications (CAD/CAM), desktop

publishing, software development, and other types of applications that require a moderate
amount of computing power and relatively high quality graphics capabilities. Workstations
generally come with a large, high-resolution graphics screen, at large amount of RAM, built-in
network support, and a graphical user interface. Most workstations also have a mass storage
device such as a disk drive, but a special type of workstations, called a diskless workstation,
comes without a disk drive. The most common operating systems for workstations are UNIX and
windows NT. Like personal computers, most workstation is single-user computers. However
workstations are typically linked together to form a local-area network, although they can also be
used as standalone systems. In networking, workstation refers to any computer connected to a
local-area network. It could be a workstation or a personal computer.

Minicomputer:

A multi-user computer capable of supporting up to hundreds of users simultaneously. They

are called as “Midrange Computers” and were produced in 1960’s using transistor, center
memory technology and innovation. They are quite smaller in size, less expensive and speedier
yet not as quick as a mainframe or supercomputer, they are utilized or used as a part of private
company organizations, and in the production, department to monitor or screen manufacturing
process. They help multi-client operations and have a very difficult operating system to deal with
and can function as a “HOST” in a system where 100 terminals can be supported. The effective
and powerful minicomputer is called as “super-minis”.

Examples:

 VAX
 Texas Instrument TI-990
Mainframe:

A powerful multi-user computer capable of supporting many hundreds or thousands of users

simultaneously. They are gigantic in size, quick, extremely costly and expensive they are not as
quick as the supercomputer but still, they are exceptionally costly. They are planned and created
to process incredible amount of information and data they can execute million of guidelines or
instruction per second and can store billions of information or data. They can store and process
tremendous amount of information accordingly it is generally utilized and used as a part of
educational organization segment where bulk information has to be saved, it is additionally used
as a part of insurance sector. They support more than 1000 remote computers and can work as a
“HOST” for different and multiple operating systems.

Examples:

 IBM Z890
 Hitachi’s Z800

Supercomputer:

An extremely fast computer that can perform hundreds of millions of instructions per
second. These are the speediest computers compared with all other computers, which have fast,
amazing capacity or storage limit, expensive and require gigantic space they are called as “Super
Computer”. They are accommodated in large Air conditioned room, some of them can take can
entire building for its installation. A Desktop Microcomputer process information and guideline
in a millionth of second and at times in microseconds, though the supercomputer can play out a
speed of nanoseconds or even in picoseconds, the speed of the supercomputer is million times
quicker and faster than desktop PC. There a speed is measured or counted in “FLOPS” (Floating
Point Operation Per Second) it can perform a speed of over 1 billion per second.

Examples:

 PARAM 10000 which was developed in India by C-DAC, Pune

 IBM Deep Blue which was specially designed for playing chess
 Tianhe-2 which was developed in China
2. State the steps involved in MIS development?
Meaning of MIS:
MIS is management system consist of people, machines, procedures, data bases and
data model as its elements. The system gathers data from internal and external it and supplies
information to assist manager in the process of decision making.
Steps involved in MIS development:
 Feasibility study
 Analysis
 Design
 Development and Testing
 Implementation
 Evaluation
 Maintenance

In the field of information systems where a systems specialist develop an information

system to improve an existing system or develop a new system based on user requirements is
called as information systems development.

The development of information systems can either be acquired through in-sourcing, out-
sourcing, self-sourcing, or prototyping.

Feasibility study:

The stage where information analyst makes a study of whether the management’s concept
of having the desired new system is achievable. It may be that development of a new system is
not needed instead an update of the existing is enough.

Analysis:

The stage where users and IT specialists work together to collect and comprehend the
business requirements. Based on requirements, both will work on the design and discuss the
tasks to be done. The user and IT specialists signs on the joint application design to formalize the
business requirements.
Design:

The stage where the systems blueprint is created. The technical architecture is designed
which includes telecommunications, hardware and software suited for the system.

Development and Testing:

The stage where building of the technical architecture, database and programs are executed.
It is also the stage where the system is tested using the established tests scripts and compare the
expected outcomes to actual outcomes.

Implementation:

The stage where system is in place and is used by the actual workforce. User guide manual
and training are provided to users.

Maintenance:

The stage where needs to be enhanced or strengthened in order to meet the goals of the
organization.

3. Discuss the role of computerized accounting?

Meaning:
A computerized 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.
Role of computerized accounting
The manual system of recording accounting transaction requires maintaining books of
accounts such as journal, cash book, special purpose books, and ledger and so on. From these
books summary of transactions and financial statements are prepared manually.
The advanced technology involves various machines, which can perform different
accounting functions, for example a billing machine. This machine is capable of computing
discount, adding net total and posting the requisite data to the relevant.
 With substantial increase in the number of transactions, a new machine was developed
to store and process accounting data with greater speed and accuracy. A computer, to which
it was connected, operated this machine.
As a result, the maintenance of accounting data on a real-time basis became almost
essential. Now maintaining records become more convenient with the computerized
accounting.
Labor saving:
Labor saving is the main aim of introduction of computers in accounting. It refers to
annual savings in labor cost or increase in the volume of work handled by the existing staff.
Time saving:
Savings in time is another object of computerization. Computers should be used
whenever it is important to save time. It is important that jobs should be completed in a
specified time such as the preparation of pay rolls and statement of accounts. Time so saved
by using computers may be used for other jobs.
Accuracy:
Accuracy in accounting statements and books of accounts is the most important in
business. This can be done without any errors or mistakes with the help of computers. It also
helps to locate the errors and frauds very easily.
Minimization of frauds:
Computer is mainly installed to minimize the chances of frauds committed by the
employees, especially in maintaining the books of accounts and handling cash.
Effect on Personnel:
Computer relieves the manual drudgery, reduces the hardness of work and fatigue, and
to that extent improves the morale of the employees.
A full disclosure is insisted by securities exchange board of India [SEBI] and therefore,
full information and its neat, simple, and quick presentation has become very essential.
Manually system many not able to provide all these facilities.
In recent times, computers are being used to maintain the accounting records and for the
preparation, analysis, and interpretation of accounting statements. Hence, the system
 operated through computers is called as computerized accounting or simply, accounting in
computerized environment.
4. What is cost center and cost category?
Cost center:
A cost center, sometimes cost center, is a department with in a business to which costs
can be allocated. The term includes departments which do not produce directly but incur
costs to the business, when the manager and employees of the cost center are not accountable
decision of the business but they are responsible for some of its costs.
Types:
There are two main types of cost centers:
 Production cost centers, where the products are manufactured or processed. Example
of this is an assembly area.
 Service cost centers, where services are provided to other cost centers. Example of
this is the personnel department or the canteen.
Examples:
 Marketing department
 Human resource
 Research and development
 Work office
 Quality assurance
 Engineering
 Logistics
 Procurement
Benefits:
There are numerous benefit of a cost center which includes:
 Monitoring efficiency- cost centers are beneficial as they allow the effectiveness of
all aspects within a company to be monitored closely.
 Employee confidence- the delegation of authority that takes place when making
employees accountable for cost center is a way to improve confidence.
  Loss prevention- cost centers try to update processes, be more effective and save
money so that they can reduce the expenses. Cost centers try to cover all of their costs
with offsetting revenue by reducing expenses and producing unpredicted revenue,
thus preventing loss.
 Management efficiency- managers compare cost data from different time periods in
order to see whether the cost center is becoming more or less profitable. Generally a
specific person (a cost center manager) is held accountable for costs incurring in the
cost center under his or her control, in which case, collecting and comparing costs
may motivate the manager to be more productive.
Drawbacks:
There are a few drawbacks of cost center which include:
 Negative effects on other departments- although the cost of operating a specific
department is simple to calculate, cost centers are a source of encouragement for
managers to underfund their elements so that it can benefit the cost center, which can
have a harmful effect on other departments within the firm.
 Hard to monitor efficiency- it is hard to keep a track of how efficient these centers
are.
 Efficiency and productivity cannot be assessed properly- in a cost center, the result of
a decision is calculated by cost alone; the achievements of the cost center are not
measured in financial terms, therefore it is hard to assess efficiency and productivity
properly.
Cost category:
A cost category is used to define costs into a category more specific than a CBS code.
The most commonly used cost category types are labor, equipment, material and other. These
types allow you to categories costs into groups. For example, you may want to track costs
associated with labor. When you create cost categories, you should evaluate what fields you
want to be enabled for use, particularly if you plan to use the calculation fields. Different cost
categories enable different fields. A cost category type of other will not enable any extra
fields.
 Labor:
If the cost category type is labor, quantity, unit of measure, production rate and labor rate
are editable fields. Cost for a budget line item with a labor cost category is equal to quantity
multiplied by production rate multiplied by labor rate. You can also manually enter the cost.
Equipment:
If the cost category type is equipment, quantity, unit of measure, and unit rate are editable
fields. Cost for a budget line item with a labor cost category is equal to quantity multiplied by
unit rate. You can also manually enter the cost.
Material:
If the cost category type is material, quantity, unit of measure, and unit rate are editable
fields. Cost for a budget line item with material cost category is equal to quantity multiplied
by unit rate. You can also manually enter the cost.

5. How will you create budget?

Step1: To start the process tally Erp9
Step2: To create the company Alt+F3
Step3: The process the process start in budget F11 Accounting features
Step4: The maintain budget and budgetary control yes key enter
Step5: To start the account info enter budget create
Step 6: The process of primary groups
Steps7: The direct or indirect expenses
Step 8: The process of all data enter ledger but using the Alt+C
Step9: Escape accounts info ledger

Step10: The data monthly wise payment period

Step11: The process change the date
Step12: The press the key Alt+B
Step13: change the date
Step14: Check the result
 Step15: F1 detailed view
Step16: Stop the process.
6. List out the primary groups of revenue ratio?
 Branch/Division
 Capital accounts
 Sales accounts
 Loan (Liabilities)
 Indirect expenses
 Indirect income
 Suspense account
 Current Liabilities
 Misc. expenses (asset)
 Purchase accounts
 Current Assets
 Direct incomes
 Fixed Assets
 Direct expenses
 Investments.
Revenue ratio:
Cost of sales to revenue ratio, also called sales-to-revenue ratio or efficiency ratio is a
metric used to measure how productive or efficient is company’s sales operation. It’s done by
comparing expenses generated by sales operations with company’s revenue.
 10 marks

7. What are the steps involved in creating a new company in tally?

Step1: To start the program tally Erp9
Step2: To create a new company Alt+F3
Step3: The process all details enter company creation
Step4: Enter the key
Step5: To process the account info ledger

Step6: Multiple ledger create

Step7: All data enter ledger

Step8: Change the period
Step9: Escape key used accounts info check the result
Step10: The result trail balance display trail balance

Step11: The result will check the process of gateway of tally

Step12: Any correction Single user Alter
Step 13: Stop the process
8. Explain the different types of voucher?
The following points the top two types of voucher in accounting. The types are:
 Primary or accounting vouchers.
 Supporting vouchers.

Types of voucher

Accounting voucher supporting voucher

Cash voucher Non cash voucher or Outside voucher inside voucher

Transfer voucher

Prepared by Prepared by
Third parties firm itself

Credit voucher for Debit voucher for

Cash receipts cash payments

I. Accounting voucher:
These vouchers are prepared on the basis of supporting vouchers by the accounts clerk or
the accountant of the organization and which are countersigned by an authorized signatory. As
soon as it is signed the same is recorded in the books of accounts. These vouchers are made both
for cash and non-cash transactions.

 Cash voucher
 Non-cash voucher or Transfer voucher
1. Cash voucher:

Cash vouchers are the documentary evidence of both cash receipts and cash payments.
Again, cash vouchers are of two following types.

1. Debit voucher
2. Credit voucher

Debit voucher:

Debit vouchers are the documentary evidence of cash payments. These vouchers are
prepared to keep records of various cash payments relating to the business including capital and
revenue payments. For example, payment of wages and salaries, purchase of plant by cash;
purchase of goods for cash, etc.

Contents of debit vouchers:

a) Names and addresses of the parties

b) Date of preparing the voucher
c) Voucher number
d) Amount of the transaction
e) Heads of account
f) Signature of the person who is preparing the voucher
g) Authorized signatory
h) Narration i.e., short description of the transaction
i) Number of supporting vouchers

Credit voucher:

Credit vouchers are the documentary evidence of cash receipts. These vouchers are
prepared to record various cash receipts relating to the business. Example of credit vouchers: sale
of goods for cash; sale of fixed assets or investments for cash; cash received from debtors, etc.
Contents of credit vouchers:

1. Names and addresses of the parties

2. Date of preparing the voucher
3. Voucher number
4. Amount of the transaction
5. Heads of account
6. Signature of the person who is preparing the voucher
7. Authorized signatory
8. Narration i.e., short description of the transaction
9. Number of supporting vouchers

2. Non-cash voucher:

Non-cash or transfer vouchers are the documentary evidence of non-cash transaction. These
vouchers are prepared to record the non-cash transactions of the business example of non-cash
vouchers are: goods sold on credit; sale of fixed assets or investment on credit; writing-off
depreciation or bad debts, return inward, etc.

Contents of Non-cash vouchers:

 Names and addresses of the parties

 Date of preparing the voucher
 Voucher number
 Amount of the transaction
 Heads of account
 Signature of the person who is preparing the voucher
 Authorized signatory
 Narration i.e., short description of the transaction
 Number of supporting vouchers

II. Supporting vouchers:

 Supporting vouchers are the documentary evidence of business transaction which have
happened.

 External supporting voucher

 Internal supporting voucher

External supporting voucher:

These vouchers are prepared by the third parties who are associated with the firm.

 Debit note received

 Credit note received
 Purchase invoice received from the supplier of goods, etc.
 Cash memo received from the sellers, etc.

Internal supporting vouchers:

These vouchers are prepared by the internal staffs on behalf of the firm which are accepted
by the third parties for the transaction so happened.

 Counterfoil-of challan for payment of income tax to a bank;

 Counterfoil of pay-in-slip when money is deposited into bank, etc.

9. What are the different types of budget?

Meaning

Budget is defined as a plan, financial in nature, for a predefined period usually for a
period of one year. For example, a sum of money allocated for a period of one year. It is an
integral part of almost everything be it government, organizations, small businesses, or even a
household. Overspending of the budget shows a lack of planning and managing costs and
income.

Following are 10 different types of budget. These are commonly used in almost every
organization but various businesses may require different budgets.
Cash flow budget:

Predicting when and how the cash will flow in or out of the business is called a cash flow
budget. The cash flow budget is usually specified for a specific time, for example, a year. Cash
flow budget is useful for the organization to manage its cash and it also considers factors such as
accounts payable to determine whether a company has sufficient cash flow in hands for
continuing its operations.

Cash flow is also important in determining major investment decisions of the company. A
pharmaceutical company, for example, may use its cash flow budget to predict whether it can
start investing in a new product or not. Many organization invest the additional cash flow
generated after taking care of all expenses into social and charitable work which falls under
corporate social responsibility.

Operating budget:

A forecast of projected income and expenses along with its analysis over the course of a
specific period of time is called the operating budget. Operating budget must include factors such
as production, labour cast, etc. to provide a clear picture for the company.

The specific time period for operating budget is weekly, monthly, quarterly, half yearly or
yearly depending on the convenience of the organization. A regular month on month or quarter
on quarter analysis of these reports helps in the determination of overspending of budgets.

Financial budget:

The company strategy for managing it assets income and expenses and other financial
aspects are present in the financial budget. The financial budget helps to paint the overall picture
of the financial health of the company and an overview of it spending in accordance with its
revenues from core operations.

A financial budget is a very strong determinant of stability of the company and a positive
financial budget means good business and health organization why the negative financial budget
indicates probable issues.
Sales budget:

This type of budget gives some expected sales revenue and expenses and selling for the
organization for a specific period of time. It is the backbone of the organization or it is also
known as the nerve centre since it is the initiation on which are deposits are also based. Sales
forecasting plays a very important role and determination of sales budget is both should be
proper for further things to fall in place.

Forecasting of sales can be done either in quantity or value depending on the organization.
In case of heavy equipments, it can be mentioned in quantity wise in case of FMCG products
business value may be mentioned.

Production budget:

Sales budget forms the basis for the preparation of the production budget. Stock levels are
also taken into consideration along with the manufacturing program of the organization. The
production budget is very useful in determining the cost of production which in turn will decide
the price of the product. Every organization has a different type of production budget.

If the sales and demand go higher or lower it would be the responsibility of the
organization to adjust their production budgets accordingly.

Overheads budget:

Overheads budget is the type of budget which involves all the costs and expenses needed
for a specified period of time of production. This includes but is not limited to indirect labour,
direct and indirect factory expenses.

A collection of all the overheads of the factory, admin, distribution etc, is included under
overheads budget. Usually, the budget is prepared department wise for efficient control over the
cost. The manufacturing expenses are further divided into fixed, semi-variable and variable
costs.
Personnel budget:

Personnel budget is one of the crucial types of the budget which covers the manpower
budget for the specific period. Labour hours, workers grade, costs etc. since it takes care of all
the personnel, and efficient working of an organization depends on the payment of the
employees, this is one of the important types of budget.

Marketing budget:

The budget allocated to the marketing department is known as the marketing budget. This
type of budget takes care of all the marketing and promotional activities of the company for the
customers. The ultimate aim of marketing is to assist the sales team to generate more business.

The marketing budget for the year decides the number of activities to be done in one
financial year.

Static budget:

Static budget is similar to fixed costs. These are the expenses which are static and remain
unchanged over a long period of time and it could be plumbing supply costs, warehouse cost,
factory maintenance etc.

Master budget:

A combination of all the individual budgets of the company, which gives a complete
picture of the overall financial picture of the organization is called as master budget. All the
departmental budgets like sales, marketing, overheads etc budgets are combined to prepare
master budget.

The above were all the different types of budget that exists and the use of these budgets
may vary from business to business.
10. Explain the primary group, sub group in tally?

Group is a collection of ledgers of the same natures. Tally software automatically creates
28 groups which are used in the chart of account. Out of 28 predefined groups in tally, 15 groups
are primary groups and 13 groups are sub groups. The different types of groups are

1. Primary groups
2. Sub groups

Example of group

Current Assets
(primary group)

1. Cash in hand, 3. Stock in hand

2. Bank accounts 4. Sundry debtors

(Sub groups)

Primary groups:

Primary group in tally is main group, group are structured as hierarchical organization. At
the top of hierarchy are primary groups. Among 15 primary groups, 9 groups are balance sheets
items and 6 groups are profit and loss a/c items.

List of primary groups in tally:

1. Branch/Division
2. Capital accounts
3. Sales accounts
4. Loan (Liabilities)
 5. Indirect expenses
6. Indirect income
7. Suspense account
8. Current Liabilities
9. Misc. expenses (asset)
10. Purchase accounts
11. Current Assets
12. Direct incomes
13. Fixed Assets
14. Direct expenses
15. Investments.

Sub groups:

Sub groups are part of primary group, sub groups can be divided into 13 groups.

List of sub groups in tally:

1. Sundry creditors
2. Secured loans
3. Stock in hand
4. Provisions
5. Cash in hand
6. Duties & Taxes
7. Deposits (Assets)
8. Bank OD Accounts
9. Unsecured loans
10. Sundry debtors
11. Bank accounts
12. Reserves & Surplus
13. Loan & Advances (Assets)
 Tally ERP 9 follows the single ledger concept of accounting and this leads to direct contrast
to subsidiary ledger accounting. So all financial entries are performed using ledgers or account
heads. You can group all ledgers and financial statements can be drawn according to
requirements of company