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Computerized Accounting System: Advantages and Disadvantages Article shared by : ADVERTISEMENTS:
Here we detail about the advantages and disadvantages of computerized accounting system. Advantages of Computerised Accounting System: The main advantages of using a computer accounting program are as follows: (i) Faster Processing: ADVERTISEMENTS:
Computers require far less time than human beings in performing a particular task. Therefore, accounting data is processed faster using a computerized accounting system. (ii) Accurate Information: There is less space for error because only one account entry is needed for each transaction unlike repeated posting of the same accounting data in manual system. (iii) Reliability: ADVERTISEMENTS:
Computer systems are immune to boredom, tiredness or fatigue. Therefore, these can perform repetitive functions effectively and are highly reliable as compared to human beings. (iv) Easy Availability of Information: The data can be made available to different users at the same time. This is called data sharing. (v) Up-to-date Information: Account balances will always be up to date since the records are automatically updated as and when accounting data is entered or stored. (vi) Efficiency: The computer based accounting system ensures better use of time and resources. (vii) Storage and Retrieval: ADVERTISEMENTS:
Computer based systems require a fractional amount of physical space as compared to the books of accounts in the form of journals, ledgers and accounting registers. (viii) Works as a Motivator: Employees using computer systems feel more valued as they are trained and specialized for the job. (ix) Automated Document Production: Accounting reports like cash book, trial balance and financial statements are generated automatically and are easily accessible just by a click of mouse. (x) MIS Reports: It is easier to monitor and control the business using the real time management information reports generated by the computerized information systems. Limitations of Computerized Accounting Systems: The main limitations of Computerised systems are being dependent upon the operating environment they work in. Some of them are listed as follows: (i) Heavy Cost of Installation: Computer hardware needs replacing and software needs to be updated from time to time with the availability of newer versions. (ii) Cost of Training: To ensure effective and efficient use of computerized system of accounting, newer versions of hardware and software are introduced. This requires special training and cost is incurred to train the staff personnel as specialists. (iii) Fear of Unemployment: Reflects the feelings of the staff on the introduction of computerized accounting system. The staff fears redundancy and show less interest in computers. (iv) Disruption in Work: When computerized system is introduced, there might be loss in the work time and certain changes in the working environment. (v) System Failure: The danger of a system crashing due to some failure in hardware can lead to subsequent loss of work. This occurs when no back-up is retained. (vi) Time Consuming: In order to avoid loss of work at the time of system failure, there is a need for providing backup arrangements which is a time consuming process. (vii) Unanticipated Errors not Known: Unlike human beings, computers do not have the capability to judge or detect unanticipated errors in the system. (viii) Breaches of Security: The danger of viruses and hacking into the system from outside creates a strong need for security of system. Similarly, the person who has created the specific program can easily defraud by tempering with the original records. (ix) Health Dangers: Extensive use of computers may lead to many health problems such as eyestrain, muscular complaints, backache etc. resultantly reducing working efficiency as well as increasing medical expenditure. You May Like The Most Addictive Game of the Year Forge Of Empires - Free Online Game
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