Theory question 101
Information Technology in AccountingA business is considering the introduction of a computer accounting system
(a) State four (i) benefits of a computer accounting system; (ii) disadvantages of a computer accounting system
(b) List three areas of application of computer in accounting.
Show the model answer
(a)(i) Any four benefits: fast processing of large volumes of data; accurate calculations; large storage in little space; easy updating, editing and retrieval of records; reports and statements produced quickly; reduces clerical labour and cost in the long run; integrates different records.
(ii) Any four disadvantages: high cost of buying and installing; high maintenance cost; needs trained staff; unreliable power supply disrupts work; risk of data loss, virus attack or fraud; equipment becomes obsolete quickly; may cause staff redundancy.
(b) Any three: payroll preparation; invoicing and billing; stock (inventory) control; sales and purchases ledgers (debtors and creditors); fixed asset register; cash management/bank reconciliation; preparing final accounts and budgets.
Each point needs only one short sentence; give exactly the number asked for.