3: Computerised accounting systems

Question 1

Give 4 advantages of computerised accounting systems

Answer 1

-Speed of processing large volumes of transactions
- In‐built controls to reduce input errors
- Storage and sharing vast quantities of data in easily accessible formats
- Freeing up accountants’ time to focus on higher level skills, such as analysis and advice

Question 2

What are the 3 elements of computerised accoutning systems?

Answer 2

1. Inputs e.g. source documents, standing data
2. Processes e.g. ledgers, journals, calculations, record keeping
3. Outputs e.g. reports, trial balance, financial statements

Question 3

What are the 4 elements within a computersied accounting system?

Answer 3

Standing data - Reference data that does not regularly change, for example customer addresses for delivery of goods, payment details for suppliers.

Account codes - Unique codes allow a business to accurately record the various transactions correctly. The codes can be sub‐divided into the required level of detail.

Processing - The recording of transactions in a computerised system often referred to as processing and can be performed “real‐time” (each transaction is updated at the point it takes place) or “batch processing” where are group of similar transactions are recorded in bulk at the end of a period (eg the day or week).

Controls - Computerised accounting systems will require adequate controls embedded within them to ensure the accuracy of the information, such as authorisation and mathematical controls. Used to: Prevent, detect, correct errrors.

Question 4

What is cloud computing

Answer 4

Resources such as software and information are provided to computers via the internet. Users can then log into their accounts remotely, with the software and processing being performed in the cloud rather than on their computer.

Question 5

What is the credit sales system order?

Answer 5

1. Customer order - request for G/S at agreed price
2. Dispatch goods - G/S delivered w/ delivery note, which customer signs
3. Raise invoice - Seller creates sales invoice to request payment for G/S delivered. This is the source document that must be recorded in the accounting system.
4. Recieve payment - customer pays outstanding amount

Question 6

What is the credit purchases system order?

Answer 6

1. Purchase order - Business identify G&S required and raise an approved purchase order to send to a supplier
2. Receive goods - Goods recieved note (GRN) records receipt
3. Receive invoice - Invoice received from supplier requesting payment. This purchase invoice is the source document for recording the purchase in the accoutning system.
4. Make payment - business pays outstanding amount

Question 7

What are the key source documents for credit transactions?

Answer 7

Sales and purchases invoices

Question 8

What are credit notes?

Answer 8

documents issued to customers relating to returned goods, or refunds when a customer has been overcharged. It is like a negative invoice and thus is another source document for credit transactions.

Question 9

What is a transaction report?

Answer 9

Sophisticated systems can download a transaction report from the bank detailing the receipts and payments for a period which is then uploaded into the computerised accounting system. The transaction report thus acts as the source document for these cash transactions.

Unexpected or “unmatched” cash transactions can be highlighted in an exception report for further investigation.

Question 10

What is a petty cash book?

Answer 10

The petty cash book records all payments out of and receipts into petty cash. It is one area of accounting that is often still manual.

Question 11

What is payroll

Answer 11

the record of wages and salaries costs. It records all the key information from the employee’s payslip and any additional costs to the employer.