The study aims to help and assess the effectiveness of computerize accounting system for organizations. It applies a case study plan to create the appropriate system for the Mimosa Company which is chosen by the proponents to be the case of the study. This chapter includes related literature to support the development of the proponents study and. The following literatures are to affirm the need to create a computerize system for the said company.
In our generation, computers are widely used by different institutions, companies, industries, schools, and particularly business sectors. They used computer to lessen workload and for convenience and to acquire more reliable outputs.
According to Pankaj Pendse (2012) Integrated accounting system is a distinguished accounting system in which the accounts are integrated and only a single set of accounts are maintained. Essentially it avoids maintenance of Accounts under cost accounting and financial accounting. This enables a firm to eliminate separate Profits & loss Accounts under financial accounting and cost accounting systems & only Profit & loss Accounts are prepared. The development of a computerized Accounting System for the Mismosa will saves the accountants effort of encoding data from clients, saves time & efforts, and user friendly.
According to Steve Pugh (2012) The new economy requires a new way of doing business. Businesses must be flexible to accommodate the changes that arise in today’s rapidly fast-paced business environment, in this pressure-cooker business landscape, strategic finance is more important than ever. Corporate management is relying on the ‘sages of financial insight’ to provide up-to-date financial information so they can make better, more informed decisions. The accounting department is also expected to effectively navigate the world of changing regulations and mitigate risk. by automating as much as possible, accounting departments have been able to successfully gain efficiencies and visibility. By doing the computerized accounting system the Mimosa will help them in the process of accessing data faster, and help them analyze data.
According to Gale Cengage (2011) ERP systems are large-scale information systems that impact an organization’s AIS. These systems permeate all aspects of the organization and require technologies such as client/server and relational databases. Other system types that currently impact AISs are supply chain management (SCM) and customer relationship management (CRM). Modern ERP systems provide a broader view of organizational information, enabling the use of advanced accounting techniques, such as activity-based costing (ABC) and improved managerial reporting using a variety of analytical techniques.
According to accountingcoach in accounting, ERP is the acronym for enterprise resource planning. ERP could be described as a database software package that supports all of a business’s processes and operations. Its goal is to have an integrated system for organizations. If the company will include information on its different departments, their operations and transactions the system would be sophisticated, in turn a company requires committing considerable resources for planning, training, and implementing an ERP system. The purpose of ERP is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.
According to Wikipedia, computer is a general purpose device that can be programmed to carry out a finite set of arithmetic or logical operations. For an effective accounting system computer will give an organization a benefit of convenience of work since the computer is a device that can be program which means its function’s scope is wider than a single person doing a manual job.
According to wise GEEK, a computer is, at its most basic, a machine which can take instructions, and perform computations based on those
instructions. That means a computer has the ability to perform instructions which are also know as program, that is the difference of a computer from a mechanical calculator, in connection to the system that the group is proposing using a computer for an accounting system will give the company the advantage of having an on-screen input and printout information, other advantages of using a computerized accounting system are, speed the availability of information for an organization has faster retrieval than a manual system, accuracy there is a less chance of committing an error using an computerize accounting system than making 2 or 3 mistakes on a manual system, efficiency better use of resources and time, cost saving computer system will decrease the audit cost for the staffs doing manual system that would reduce company’s expenses, staff motivation new using new system will require the staffs to be train and to acquire new knowledge that would motivated to learn further in their work.
A definition from Business Dictionary.com that Management Information system is an organized approach to the study of the information needs of an organization’s management. The objective of having a management information system in an organization is to design and apply procedures, processes and routines that will provide suitably detailed reports in an accurate, consistent, and timely manner. Thus having a management information system will help the proponents in creating the suitable system for the Mimosa, this would help the company to track, store, manipulate, and distribute information to the appropriate people when necessary. Having a management information system can enable their business to contour its operations into a cohesive function unit.
According to BusinessDictionary.com, a Accounting Information System (AIS) is subset of Management Information system (MIS), responsible for providing timely and accurate financial statistical reports for internal management decision making, and for external parties such as creditors, investors, and regulatory and taxation authorities. Having a computerized accounting system organizations using it will reduce human labor and will provide timely report to the company.
According to highered.mcgraw-hill.com, an accounting system compose of the personnel, steps, technology, and records used by an organization. Having a computerize accounting system aims to develop accounting information and to communicate this information to decision makers. The designs of this system vary greatly from different organizations; most accounting system, computers, highly trained personnel, and accounting reports are included. But in every case, the basic purpose of an accounting system remains the same it is to meet the organizations or company’s needs for information efficiency.
Also highered.mcgraw-hill.com state that, the types of accounting information that a company develops vary with such factors as the size of the organization in determining the information needed to develop a company’s accounting system. In some cases law should be prescribe in attaining accounting information for a certain company, income tax regulations require every business to have an accounting system that can measure the company’s taxable income and explain the nature and source of every item in the company’s income tax return is an example of accounting information that should be prescribe by the law. Publicly owned companies are required to make financial statements to conform to the accepted accounting principles. Other types are for practical necessity matters, every business needs to know the amounts owed to it by each customer and the amounts owed by the company to each creditor, and uses generally accepted accounting principles for financial reporting.
According to Carol Wiley, ehow Contributor, AIS offer financial accounting information about a business. The information gathered will help the manager’s plan and control the operations and provide reports to outside parties like stockholders, creditors and government agencies. The system will interpret and record the effects of the business transactions, it will classify the effects of the same transaction and will summarize the information contained by the system. Parts of accounting system might include financial reporting, cost accounting, management accounting and enterprise resource planning (ERP).
According to eia.gov, the Financial Reporting System (FRS) is designed to permit review of the functional performance of the major U.S. energy-producing companies in total. In connection to the study financial reporting system is included in developing an effective accounting system, since information are involved there should be a report system that will obtain data on revenues, costs, and profits, thereby indicating financial flows and performance characteristics.
According to wiseGeek, cost accounting is an approach to evaluating the overall costs that are associated with conducting business. This is include in creating an accounting system, it is often used within a company to aid in decision making, financial accounting is what the outside investor community typically sees. It aims to capture a company’s costs of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment, it’s beneficial as a tool for management in budgeting and in setting up cost control programs, which can improve net margins for the company in the future.
According to wiseGeek managerial accounting or management accounting is the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization’s goals, it is devoted to information needed by the management of the company. Its difference in financial accounting is that it helps the manager in making its decision making; this is also included in creating an accounting system.