How to Use This Page
Solve each Samacheer Kalvi exercise question on your own first, then compare your answers. Computerised Accounting is a theory chapter — focus on understanding the concepts, advantages, limitations, and comparison with manual accounting.
Key Concepts (Quick Recap)
What is Computerised Accounting?
Computerised accounting is the use of accounting software to record, process, store, and report financial transactions. It replaces manual books of accounts with computerised databases and automated processes.
Popular Accounting Software
- Tally.ERP 9 / Tally Prime — Most popular in India
- QuickBooks — Popular for small businesses globally
- Zoho Books — Cloud-based accounting
- SAP — Enterprise-level accounting
- Busy — Popular for GST compliance in India
Main Modules of Accounting Software
| Module | Function |
|---|---|
| General Ledger | Records all financial transactions (journal entries) |
| Accounts Payable | Manages creditor accounts, bills payable, payments |
| Accounts Receivable | Manages debtor accounts, bills receivable, receipts |
| Payroll | Processes salaries, deductions, tax calculations |
| Inventory | Tracks stock levels, purchases, sales, valuation |
| Reporting | Generates financial statements, reports, analysis |
Process Flow in Computerised Accounting
1. Data Entry: Enter transactions (invoices, receipts, payments) 2. Processing: Software automatically posts to ledger accounts 3. Storage: Data stored in the database 4. Reporting: Generate reports instantly (trial balance, P&L, balance sheet) 5. Analysis: Financial analysis, charts, graphs
Advantages of Computerised Accounting
| Advantage | Explanation |
|---|---|
| Speed | Transactions processed instantly; reports generated in seconds |
| Accuracy | Automatic calculations eliminate arithmetic errors |
| Auto-posting | Journal entries automatically posted to ledgers |
| Auto-trial balance | Trial balance generated automatically; always balanced |
| Instant reports | P&L, Balance Sheet, and other reports at the click of a button |
| Data storage | Large volumes of data stored in compact form |
| Easy retrieval | Search and find any transaction instantly |
| Multi-user access | Multiple users can work simultaneously |
| Security | Password protection, audit trail, access control |
| GST compliance | Automatic GST calculation and return filing |
| Backup | Easy backup and recovery of data |
Limitations of Computerised Accounting
| Limitation | Explanation |
|---|---|
| High initial cost | Hardware, software, and setup costs |
| Training required | Staff need training to use the software |
| Power dependency | Cannot work without electricity |
| System failure | Risk of data loss due to crashes or viruses |
| Security risks | Hacking, unauthorised access, data theft |
| Systematic errors | Wrong input → wrong output (GIGO — Garbage In, Garbage Out) |
| Reduced human judgement | Software cannot handle unusual transactions without human input |
| Obsolescence | Software needs regular updates; versions become outdated |
Comparison: Manual vs Computerised Accounting
| Feature | Manual Accounting | Computerised Accounting |
|---|---|---|
| Speed | Slow | Fast |
| Accuracy | Prone to arithmetic errors | Highly accurate |
| Posting | Manual posting to ledgers | Automatic posting |
| Trial Balance | Prepared manually; may not balance | Auto-generated; always balanced |
| Reports | Time-consuming to prepare | Instant generation |
| Storage | Physical books need space | Digital storage; compact |
| Retrieval | Time-consuming | Instant search |
| Cost | Low initial cost | High initial cost |
| Skills | Basic accounting knowledge | Training required |
| Security | Physical security needed | Password protection, audit trail |
| Backup | Manual copies | Automatic backup possible |
| GST | Manual calculation | Automatic calculation |
| Multi-user | Limited | Multiple users simultaneously |
I. Choose the Best Answer (MCQs)
Q1. The most popular accounting software in India is (a) QuickBooks (b) Tally (c) SAP (d) Zoho Books
Q2. In computerised accounting, journal entries are automatically posted to (a) Trial balance only (b) Ledger accounts (c) Balance sheet only (d) Cash book only
Q3. Which of the following is an advantage of computerised accounting? (a) High initial cost (b) Dependency on electricity (c) Speed and accuracy (d) Training required
Q4. GIGO stands for (a) Good Input Good Output (b) Garbage In Garbage Out (c) General Input General Output (d) Graphical Input Graphical Output
Q5. Which module of accounting software processes employee salaries? (a) General Ledger (b) Accounts Payable (c) Payroll (d) Inventory
II. Fill in the Blanks
1. Computerised accounting uses accounting software to record and process financial transactions. 2. The most popular accounting software in India is Tally (Tally Prime). 3. In computerised accounting, posting to ledger accounts is done automatically. 4. The trial balance in computerised accounting is always balanced. 5. GIGO stands for Garbage In Garbage Out. 6. The payroll module processes employee salaries. 7. The inventory module tracks stock levels and valuation. 8. The main limitation of computerised accounting is high initial cost and dependency on technology. 9. In manual accounting, the trial balance may not balance due to arithmetic errors. 10. Password protection and audit trail are security features of computerised accounting.
III. True or False (with corrections for false statements)
IV. Match the Following
| Column A | Column B | Answer |
|---|---|---|
| 1. General Ledger | (a) Processes salaries | (b) Records all transactions |
| 2. Accounts Payable | (b) Records all transactions | (c) Manages creditors |
| 3. Accounts Receivable | (c) Manages creditors | (d) Manages debtors |
| 4. Payroll | (d) Manages debtors | (a) Processes salaries |
| 5. Inventory | (e) Generates reports | (f) Tracks stock levels |
V. Answer Briefly (2-mark questions)
VI. Answer in Detail (5-mark questions)
Common Mistakes to Avoid
- Saying computerised accounting eliminates ALL errors: It only eliminates arithmetic errors. Logical errors (wrong classification, wrong data entry) still occur (GIGO).
- Confusing modules: General Ledger = recording transactions; Payroll = salary processing; Inventory = stock management. Don't mix them up.
- Forgetting limitations in comparison: When comparing manual vs computerised, don't only list advantages. Always mention limitations too (cost, training, power dependency).
- Not understanding GIGO: GIGO means that the computer processes whatever data is given. If the input is wrong, all reports will be wrong. Human verification is still essential.
- Saying "computerised accounting doesn't need accounting knowledge": You still need to understand debits, credits, classification, and financial statements. The software automates the mechanical tasks, not the thinking.
Exam Checklist
- [ ] Can you define computerised accounting and name popular software?
- [ ] Can you list at least 8 advantages of computerised accounting?
- [ ] Can you list at least 6 limitations of computerised accounting?
- [ ] Can you compare manual and computerised accounting (at least 6 points)?
- [ ] Can you name and explain the main modules of accounting software?
- [ ] Can you explain the process flow in computerised accounting?
- [ ] Can you explain what GIGO means and why it matters?
- [ ] Can you describe security features in computerised accounting?
- [ ] Can you explain how GST compliance is handled in accounting software?
- [ ] Can you explain the audit trail feature and its importance?