Page 5 - Lesson Note

When accounting functions are done by computerised accounting software that is
known as automation of accounting process under the automation of accounting
process human activity is less but accounting software is more used.

So, accounting functions like posting into ledger, Balancing, Trial Balance and

Final Accounts are prepared by computer.

Stages of Automation
There are different stages of automation as:

(i) Planning: Under this stage the assessment of size, and business transactions is
done for which automation has to be made.
(ii) Selection of Accounting Software: As there are many accounting softwares
available in the market. So, in this stage appropriate accounting software is to be
selected according to company’s need.
(iii) Selection of Accounting Hardware: Under this stage of automation the
computer hardware is selected. This hardware should be such which can fullfill the
accounting requirement and support the accounting software.
(iv) Chart of Accounts: Under this stage list of required heads of accounts is
prepared.
(v) Grouping of Accounts: There are various transactions for Expenses, Income,
Assets, Liabilities. All these transactions cannot be shown directly. So, these
transactions are grouped as salary, wages, discount and commission etc.
(vi) Generation of Reports: This is final stage of automation under this final reports
are prepared in from of Cash Book, Journal, Ledger, Trial Balance, P&L A/c and
Balance Sheet etc.
Comparison of Manual and Compute red Accounting System
Base Manual Accounting Computerised Accounting

In this system, it is done man
Identifying ually according to principles. In this system, it is also done
Financial In this system, entries are manually according to
1. Transactions recorded man ually and other principles.
2. Recording calculations also done In this, entries are recorded
manually. manually but other calculations
3. Adjustment are done by computers.
Entries In this system, all adjustments
4. entries are done manually. In this system entries related to
Financial posting are done by
statement In this system, final statements computers.
is prepared manually