Overview

What this chapter is about

Every business, big or small, has to keep a record of the money that flows in and out of it — what it sells, what it buys, whom it owes, and who owes it. For centuries this was done by hand, in bound books of account, with a pen and a ruler. Today the same job is done far faster and far more accurately by a computer running accounting software. This chapter explains how accounting moves from paper to the computer, what such software does for a business, and how it handles India's tax on sales — the Goods and Services Tax (GST).

You will learn what a computerised accounting system is and why businesses prefer it to manual books; the main features and building blocks of accounting software — its masters, ledgers, vouchers, and the reports it can produce at the touch of a button; and the essentials of GST — its three components CGST, SGST and IGST, what a GST (tax) invoice must contain, how input tax credit lets a business set the tax it paid on purchases against the tax it collects on sales, and the GST reports that the software generates to help file returns.

The material follows the standard, well-established treatment of the subject at the Standard XII level. Accounting software is described generically — the ideas apply to any package (for example, accounting software such as Tally, LibreOffice-based tools, or cloud accounting services); no single product is being taught or recommended. A few short, fully worked numerical examples show exactly how GST amounts and input tax credit are calculated.