Accounting Software / Computerised Accounting

One basic function of accounting is to record the financial transactions of a business.

In manual accounting, each transaction has to be written and posted by hand. In a computerised system, once the correct transaction is entered, related records can be updated automatically.

• Transactions can be recorded accurately and regularly.
• Information can be updated quickly.
• Ledger accounts can be updated automatically.
• Balances can be viewed whenever required.
• Repeated manual posting is reduced.

Payroll accounting deals with the wages and salaries of employees.

Computers help maintain payroll records and perform calculations faster than manual methods.

• Wages and salaries can be calculated quickly.
• Permanent payroll records can be maintained.
• Errors in manual calculations can be reduced.
• Employees can receive wages and salaries on time.

Inventory control means managing the stock or materials used by a business.

Computerised systems help management know what material is available, what is needed and when stock should be reordered.

• Shows available stock quickly.
• Helps identify reorder requirements.
• Improves control over inventory.
• Gives management information when required.

Whether accounting is manual or computerised, the basic principles of debit and credit remain the same.

The main difference is the medium of recording and processing.

The chapter explains that a computerised accounting system is a form of Transaction Processing System (TPS).

A TPS records, processes, validates and stores transactions that take place in different areas of a business.

Every business has many processes. Some are simple and some are complex. When the number of transactions increases, the business needs highly accurate and up-to-date accounting records.

Computerised accounting helps because it gives speed, accuracy and lower processing effort.

The system must follow accounting principles and have a proper grouping and coding structure for accounts.

The organisation must have a clearly defined procedure for using the computerised accounting system.

The accounting software stores transaction data in an organised database. The user can use this data to produce reports.

This is the visible part through which the user communicates with the software and the database.

The back end is the data storage system. It is normally hidden from ordinary users and responds to authorised requests from the front end.

The system processes and validates data entered by authorised users and converts it into useful accounting information.

The reporting system produces reports required by users. A good reporting system should be flexible and easy to monitor.

The software should provide the functions needed by the business. A package with many features is not useful if it does not match the organisation's actual requirements.

The package should be able to produce the reports required by management and users.

The software should be simple enough for users to understand and operate efficiently.

The organisation should consider its budget. A very expensive package may not be suitable if the expected benefits do not justify the cost.

The vendor should have a good reputation and provide reliable support.

The software should be updated when required. A vendor that regularly maintains its product is preferable.

A standard software package may not satisfy the special requirements of a particular business. Customisation may be limited.

Some pre-packaged systems may not cover all business functions or specialised management reports.

If access controls are weak, unauthorised users may view company data. The chapter notes that customised systems may have better access-control options.

Software may contain errors or bugs. The organisation may need to wait for the vendor to correct them.

The ERP should match most of the organisation's requirements.

The organisation should check whether the package provides the reports it needs.

The service quality and delivery record of the vendor are important.

Budget and available funds influence the final choice of ERP package.

• Simple to use.
• Flexible.
• Suitable for financial accounting.
• Supports different versions developed over time.

The chapter mentions different versions such as Tally 5, Tally 7.2, Tally 9 and Tally ERP 9.

Tally ERP 9 is described as an improved version that can support business activities across different locations.

It provides facilities for financial accounting, inventory, payroll and reporting.

Single-user Tally can be operated on one computer.

Multi-user Tally can be used by multiple users through a network and can support work at multiple locations.

This section displays information such as the Tally version, edition, licence details and configuration.

The Work Area is the main part of the screen where accounting work is carried out.

It has two sides:

• Left-hand side: shows information such as Current Period, Current Date and List of Selected Companies.
• Right-hand side: contains the main menus used to work in Tally.

The right-hand side mainly contains:

1. Masters — for defining ledgers, groups, sub-groups and inventory.
2. Transactions / Vouchers — for recording transactions.
3. Reports — for viewing Balance Sheet, Profit & Loss Account and other reports.

The chapter explains that capitalised and specially displayed letters in menu options work as hot keys.

For example, pressing the relevant highlighted letter can directly open a menu option instead of selecting it with the mouse.

The Calculator Area is used for quick calculations while working in Tally.

Ctrl + N activates the calculator area.

The Button Bar displays useful commands and function keys according to the current screen.

Only buttons relevant to the current screen are active.

If a character or function key is shown with a single underline, it is generally used together with Shift.

If a character or function key is shown with a double underline, it is generally used together with Ctrl.

The visible page says that after entering the required company information, choose Accept → Yes to save it.

The company will then appear under the List of Selected Companies.

This option is used to load a company so that you can work with it.

1. Open Company Information.
2. Choose Select Company.
3. Highlight the required company using the arrow keys.
4. Press Enter.

Shutting a company means unloading or closing it from the current Tally session.

The company is not deleted. It can be loaded again whenever required.

This option is used to create a new company in Tally.

This option is used to change or modify information relating to an existing company.

Select the required company and make the necessary alterations.

The supplied page states that Alt + F3 opens the Company Information menu used for company operations.

• Classifies similar accounts together.
• Makes transaction data easier to store and retrieve.
• Helps organise ledger accounts.
• Improves financial reporting.

A group can contain many ledger accounts. For example, the Ledger of Trade Debtors may contain separate customer accounts.

Similarly, a Ledger of Trade Creditors may contain separate supplier accounts.

The general ledger contains the main control accounts.

Specialised ledgers contain detailed individual accounts. For example, a debtors ledger may contain separate customer accounts.

The balance of the control account in the general ledger should equal the total of the related balances in the specialised ledger.

Tally follows the modern Single Ledger concept.

This reduces the need to separately maintain traditional sub-ledgers and control accounts. Financial entries are made using ledger accounts / account heads.

Tally identifies and classifies ledger accounts according to the nature of their transactions.

Groups are arranged in a hierarchy. At the top are Primary Groups.

The classification affects how accounts appear in the Balance Sheet or Profit & Loss Account.

The path given in the chapter is:

Gateway of Tally → Accounts Info → Groups

Use the Single Group option when you want to work with one group at a time.

Use Multiple Groups when you want to work with many groups or sub-groups together in list form.

This saves time and labour when handling several groups.

The chapter gives this path:

Gateway of Tally → Accounts Info → Groups → Single Create

On the Single Group screen, F3: Company can be used to work with a different company while creating groups.