State any four limitations of a Computerised Accounting System.

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Accepted Answer

Any four of the following limitations, with explanation, may be given:

1. **High initial cost.** Purchasing hardware and software, and training staff, needs a significant upfront investment.
2. **Dependence on power and technical reliability.** The system cannot function during a power failure, and a hardware breakdown, virus, or software malfunction can halt accounting work.
3. **Risk of data loss, hacking or virus attack.** Without proper security and backup measures, data can be lost, corrupted, or accessed by unauthorised persons.
4. **Need for trained personnel and resistance to change.** Staff must be trained to operate the software, and some staff or businesses may resist moving away from a familiar manual system. …

#	Point	How it helps
1	Speed	Large volumes of transactions are recorded and totalled in seconds; postings are automatic.
2	Accuracy	Arithmetical mistakes are almost eliminated because the software computes and posts figures itself.
3	Reliability	The machine works tirelessly and gives consistent, dependable results without fatigue-based errors.
4	Up-to-date information	Ledger balances, trial balance and cash position are always current for quick decision-making.
5	Easy storage and retrieval	Years of data are stored compactly and any account can be located instantly.
6	Quick reports	Final accounts, ratios, GST returns and MIS reports are produced at the click of a button.
7	Security	Passwords and access controls protect data; back-ups guard against loss.

Basis	Manual Accounting Process	Computerised Accounting Process
Meaning	Transactions are recorded, classified and summarised by hand in physical books of account.	Transactions are entered once into accounting software which processes them electronically.
Recording	Entries are written manually in journals and ledgers.	Data is keyed in once through vouchers; posting to ledgers is automatic.
Calculation	Totals, balances and trial balance are worked out by hand.	All calculations are done automatically by the program, so arithmetic mistakes are avoided.
Speed	Slow, because every step needs human effort.	Very fast, as processing and reporting are instant.
Accuracy	Prone to human errors in posting, casting and carry-forward.	Highly accurate; the same figure is not re-entered, reducing errors.
Storage of data	Kept in bulky registers and files that occupy space and can be damaged.	Stored electronically on disks/cloud in little space; easy to back up.
Adjusting/rectifying	Corrections need fresh manual entries and re-totalling.	Corrections are made easily and balances update automatically.

Basis	Manual Accounting Process	Computerised Accounting Process
Meaning	Transactions are recorded and books maintained by hand	Transactions are recorded and processed using accounting software
Recording	Entries written manually in journals and subsidiary books	Entries keyed in through vouchers; software posts them automatically
Posting to ledger	Each entry posted to ledger accounts by the accountant	Posting to ledgers happens automatically once a voucher is saved
Speed	Slow, especially as volume grows	Very fast; large volumes processed instantly
Accuracy	Depends on the person; arithmetic and carry-forward errors are common	Highly accurate; calculations and totals done by the system
Trial balance / final accounts	Prepared manually, each time from scratch	Generated automatically at the click of a button
Storage of data	Kept in physical books; needs large space; can be lost or damaged	Stored electronically; compact; easily retrieved
Backup	Difficult; copying books by hand	Easy; data can be backed up on disks/cloud
Cost	Low initial cost; higher clerical cost over time	Higher initial cost (hardware, software, training); low running cost

Q.State any four limitations of a Computerised Accounting System.

Concept understanding — Manual vs Computerised Accounting — Advantages and Limitations

Q.State any four limitations of a Computerised Accounting System.

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