Samacheer Kalvi 12th Accountancy Chapter 10 Computerised Accounting System Exercise Solutions

A Computerised Accounting System (CAS) is an accounting information system that uses computer hardware and software to record, store, process, and report financial transactions. It replaces manual books of account with digital databases, automates journal entries and ledger posting, and generates financial statements and reports instantly.

The five components of an AIS are: 1. Hardware — physical devices like computers, servers, printers, and storage devices 2. Software — accounting programs (Tally, Busy, etc.) that process data 3. Data — financial information stored in databases (transactions, account balances) 4. People — users including accountants, managers, auditors, and system administrators 5. Procedures — rules, instructions, and steps for data entry, processing, and reporting

1. Speed — Transactions are processed and reports generated instantly, saving significant time. 2. Accuracy — Automated calculations eliminate arithmetic errors common in manual accounting. 3. Automatic Posting — A single entry is automatically posted to all relevant ledgers and reports. 4. Instant Reports — Financial statements, trial balance, and MIS reports can be generated at any time with a few clicks.

1. High Initial Cost — Hardware, software, and training require significant investment. 2. Training Requirements — Staff must be trained to use the software, which takes time and money. 3. Risk of Data Loss — Power failures, viruses, or hardware crashes can corrupt or destroy data. 4. Dependency on Technology — System downtime or software errors can halt accounting operations completely.

| Basis | Ready-made Software | Tailor-made Software | |---|---|---| | Development | Pre-built, available off-the-shelf | Developed from scratch for one organisation | | Cost | Lower initial cost | Very high development cost | | Customisation | Limited; same features for all users | Fully customised to specific needs | | Time to implement | Quick — install and start | Long — months of development | | Examples | Tally, Busy, QuickBooks | In-house ERP systems | | Updates | Vendor provides regular updates | Organisation must maintain and update |

Tally has the following voucher types: 1. F4 — Contra Voucher — records transfers between cash and bank (e.g., cash deposited into bank) 2. F5 — Payment Voucher — records all cash and bank payments 3. F6 — Receipt Voucher — records all cash and bank receipts 4. F7 — Journal Voucher — records non-cash transactions (e.g., depreciation, adjustments) 5. F8 — Sales Voucher — records sales transactions (cash and credit) 6. F9 — Purchase Voucher — records purchase transactions (cash and credit) 7. Credit Note — records sales returns 8. Debit Note — records purchase returns

An audit trail is a record that traces every financial transaction from its source to the final financial statement. It shows who entered the data, when it was entered, and any modifications made. It is important because: 1. It ensures accountability — every entry can be traced to a specific user. 2. It helps detect fraud or errors by tracking changes to data. 3. It supports external audits by providing a clear path of evidence. 4. It is required by regulatory compliance and accounting standards.

1. Password Protection — Only authorised users can access the system using passwords. 2. Access Control — Different users can be given different levels of access (e.g., data entry only, or view-only). 3. Data Backup — Regular backups prevent data loss from hardware failure or accidents. 4. Audit Trail — Tracks all entries and modifications for accountability. 5. Encryption — Sensitive data is encoded and can only be read by authorised users. 6. Anti-virus Protection — Protects against malware and viruses that could corrupt data.

| Basis | Manual Accounting | Computerised Accounting | |---|---|---| | Recording | Written in books of original entry | Entered into software via vouchers | | Posting | Manual posting to ledgers | Automatic posting to ledgers | | Trial Balance | Prepared manually; may have errors | Generated instantly; always balanced | | Financial Statements | Prepared manually; time-consuming | Auto-generated in seconds | | Speed | Very slow | Very fast | | Accuracy | Prone to arithmetic errors | Accurate (automated calculations) | | Storage | Physical books; needs space | Digital; minimal space | | Backup | Photocopies; difficult | Electronic backup; easy | | Cost | Low initial cost; high recurring labour cost | High initial cost; low recurring cost | | Editing | Difficult; needs strike-through and overwriting | Easy; changes are tracked via audit trail | | Reports | Takes hours/days to prepare | Available instantly | | Scalability | Hard to scale for large volumes | Easily scalable | | Human error | High risk | Minimal risk | | Audit trail | Limited | Comprehensive | | Data security | Physical locks | Passwords, encryption, access control | While manual accounting is simple and suitable for very small businesses, computerised accounting is essential for medium and large businesses due to its speed, accuracy, and ability to handle large volumes of transactions.

Features of CAS: 1. Online Input and Storage — Transactions are entered through vouchers and stored in a centralised database. 2. Automatic Document Generation — Invoices, receipts, and other documents are auto-generated. 3. Automatic Posting — A single entry is automatically posted to all relevant accounts and ledgers. 4. Instant Reports — Trial balance, P&L, balance sheet, and other reports can be generated on demand. 5. Multi-user Access — Multiple users can work simultaneously with defined access levels. 6. GST Compliance — Automatic GST calculations and return filing. 7. Inventory Management — Tracks stock levels, reorder points, and valuation methods. 8. Bank Reconciliation — Automatic matching of bank statements with accounting records. 9. Multi-currency Support — Handles transactions in foreign currencies with automatic exchange rate conversion. 10. Data Security — Passwords, access control, encryption, and audit trail. Advantages of CAS: 1. Speed and Efficiency — Thousands of transactions are processed in seconds. 2. Accuracy — Automated calculations eliminate arithmetic errors. 3. Time Saving — No need for manual posting, totaling, or balancing. 4. Real-time Information — Financial position is available at any time. 5. Reduced Manual Effort — Repetitive tasks like invoicing, payroll, and bank reconciliation are automated. 6. Better Reporting — Customised reports with graphs, comparisons, and drill-down options. 7. Scalability — Can handle growing transaction volumes without additional staff. 8. Data Backup and Recovery — Easy backup prevents data loss; recovery is quick. 9. Compliance — Automatic tax calculations (GST, TDS) and statutory report generation. 10. Audit Trail — Every entry is tracked, ensuring transparency and accountability.

1. Ready-made (Off-the-shelf) Software: These are pre-developed software packages available for purchase and immediate use. Examples: Tally, Busy, QuickBooks, Zoho Books. | Merits | Demerits | |---|---| | Low initial cost | May not fit all business needs | | Quick to install and start using | Limited customisation | | Regular updates and support from vendor | May include unnecessary features | | Well-tested and reliable | May lack industry-specific features | | Wide user community | Dependency on vendor for updates | 2. Customised Software: Ready-made software modified to suit the specific requirements of an organisation. A software developer adds features or changes the existing ones. | Merits | Demerits | |---|---| | Better fit for business needs than ready-made | Higher cost than ready-made | | Retains core features of original software | Takes time to customise | | Ongoing vendor support available | Upgrades may erase customisation | | Moderate development time | May still not cover all unique needs | 3. Tailor-made Software: Software developed entirely from scratch for a specific organisation, meeting all its unique requirements. | Merits | Demerits | |---|---| | Perfectly matches business requirements | Very high development cost | | Full control over features and design | Long development time (months/years) | | No unnecessary features | Requires dedicated IT team for maintenance | | High security (unique code) | No external user community for support | | Can be modified anytime | Risk of project failure if requirements are unclear |

Step 1: Create a Company 1. Open Tally and press Alt+F3 (or go to Company → Create Company). 2. Enter the following details: - Name — Full name of the company - Mailing Name — Name for correspondence (can be same as company name) - Financial Year — Select the starting date of the financial year (e.g., 1-4-2025) - Books Beginning From — Date from which accounting records start - TallyVault Password — Optional security password - Currency Symbol — Default is ₹ (INR) 3. Press Ctrl+A to accept and save. Step 2: Create Ledgers 1. Go to Accounts Info → Ledgers → Create. 2. Enter the ledger name (e.g., "Cash," "Bank," "Sales," "Purchases," "Salary"). 3. Select the appropriate Group (e.g., Cash belongs to "Cash-in-hand," Sales belongs to "Sales Accounts"). 4. Press Ctrl+A to save. Step 3: Enter Transactions Using Vouchers 1. Go to Accounting Vouchers from the Gateway of Tally. 2. Select the appropriate voucher type: - Press F5 for Payment (cash/bank payments) - Press F6 for Receipt (cash/bank receipts) - Press F7 for Journal (non-cash entries) - Press F4 for Contra (cash-bank transfers) - Press F8 for Sales - Press F9 for Purchase 3. Enter the date, debit account, credit account, and amount. 4. Add a narration describing the transaction. 5. Press Ctrl+A to accept and save. Step 4: View Reports 1. Trial Balance — Gateway of Tally → Trial Balance 2. Profit & Loss — Gateway of Tally → Profit & Loss Account 3. Balance Sheet — Gateway of Tally → Balance Sheet Worked Example: Transaction: On 5th April 2025, paid rent ₹5,000 by cheque. Step-by-step entry in Tally: 1. Press F5 (Payment Voucher). 2. Date: 5-4-2025. 3. Under Account: Select Rent — Debit ₹5,000. 4. Under Account: Select Bank — Credit ₹5,000. 5. Narration: "Rent paid by cheque." 6. Press Ctrl+A to save. This entry automatically: - Debits the Rent account - Credits the Bank account - Updates the trial balance, P&L, and balance sheet

Security Features: 1. Password Protection — Users must enter a username and password to log in. Only authorised users can access the system. Passwords can be changed periodically for enhanced security. 2. Access Control (Role-based) — Different users are assigned different roles (e.g., data entry operator, supervisor, administrator). Each role has defined permissions — some can only enter data, some can only view reports, and only administrators can delete or modify entries. 3. Audit Trail — Every transaction entry and modification is logged with the user ID, date, and time. This ensures complete traceability and accountability. No entry can be deleted without leaving a trace. 4. Encryption — Sensitive financial data is encoded using encryption algorithms so that even if data is intercepted, it cannot be read without the decryption key. 5. Data Backup and Recovery — The system allows regular backup of data to external drives or cloud storage. In case of hardware failure or data corruption, the system can be restored from the latest backup. 6. Anti-virus and Firewall — Protects the system from malware, ransomware, and unauthorised network access. Data Management: 1. Data Entry — Transactions are entered through standardised voucher formats to ensure consistency. 2. Data Processing — The software automatically classifies, posts, and summarises data into ledgers and accounts. 3. Data Storage — All data is stored in a centralised database, reducing redundancy and ensuring consistency. 4. Data Retrieval — Reports and information can be retrieved instantly using search and filter functions. 5. Data Validation — Built-in checks prevent entry of invalid data (e.g., mismatched debit-credit amounts are flagged). 6. Data Archiving — Old data can be archived to keep the active database lean, while remaining accessible when needed.