Q. Explain briefly the role of computers in accounting?
Computers can be used as accounting machines and perform all the functions which accounting machines perform. Some of the important functions performed by computers include:
1. Transactions Recording: Business transactions are recorded accurately and regularly for making available upto date accounting information to the management. The operation of recording and posting are done simultaneously with great speed.
2. Payroll Accounting: Computers help in the calculation of wages and salaries due to each worker and employee in each department without any error. It prepares a permanent payroll record for each employee and ensures timely distribution of wages and salaries.
Disadvantages of Mechanization:
1. Expensive and most of the concerns cannot afford to make use of accounting machine.
2. More scope for fraudulent purposes as cards and sheets can be lost or misplaced or substituted easily.
3. It makes human beings mechanical and diminish the power of reasoning and logic.
4. Installation requires a complicated and expensive task of system analysis and design. Hence requires the services of programmers.
5. Installation is costly. But there are data processing centres who work on a fees basis.
6. There are chances of errors in data processing and requires serious efforts to detect and correct them.
7. Employees may resist the introduction of mechanized accounting.
8. They are not flexible as manual system.
9. The installation may take a long time. Further the hardware technology is rapidly changing rendering the system obsolete.
10. They are subject to breakdown and there is the need for standby equipment which means additional investment.