Chapter 4 Applications of Computers in Accounting Solutions
Question - 11 : - 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 - 11 : -
MIS is an information system that generates and analyses reports to provide accurate and timely report 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 organisation 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 organisation has several departments for pursuing different type of functions to ensure 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 qualification, skills and experience are supplied by HR department to be used by manufacturing department and allot them accordingly.
Similarly, manufacturing department prepares list of items based on requirement and account department processes the order. Therefore it can be seen that AIS has relations with all the departments of an organisation.
Question - 12 : - ‘An accounting report is essential report which must be able to fulfil certain basic criteria’. Explain? List the various types of accounting reports.
Answer - 12 : -
Data manipulated and processed in a way that is grasped by user without any complexity becomes information. This information is further refined to create a report. Content and the report design depends upon the management level in which it gets submitted. Decisions are taken on the basis of the reports prepared. An accounting report must fulfil 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’ need and request. Money report. Eg: Money report.
2. Summary Reports: Reports which summarise the activities happening in an organisation. 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. Example, Purchase Manager submits a report regarding different aspects of purchase.
5. Exception Reports: Reports prepared with a purpose containing conditions and exceptions. Inventory Status Report.
Question - 13 : - Describe the various elements of a computer system and explain the distinctive features of a computer system and manual system.
Answer - 13 : -
These 6 elements comprises 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 user. Two main categories of software are: a) System software b) Application Software
3. People: This element comprises of 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 is 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 a desired result. It can be of three types: hardware oriented, software oriented and internal.
6. Connectivity: The way in which a computer system gets connected with other devices like phone, printer, modem etc. by different technologies such as 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 is very accurate. Errors are detected due to wrong input of data or wrong command by user. In a manual system the results created by the humans are prone to more errors.
2. Speed- Computer performs calculation faster as compared to human brain. It executes task in a faster way than 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 with the purpose of performing 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 these information can be accessed anytime, anywhere. In manual system storage of documents is cumbersome and takes long time.