Components of a Computerised Accounting System

A Computerised Accounting System functions as a coordinated whole made up of five components. Missing or weak any one component means the system as a whole cannot function properly — this is a frequently tested distinction in Telangana Intermediate commerce examinations.

1. Hardware

Hardware is the physical, tangible equipment on which the accounting software runs: the computer (processor, memory, storage), input devices (keyboard, mouse, scanner/barcode reader), output devices (monitor, printer), and networking equipment where several computers must share the same accounting data. The hardware must have adequate processing speed and storage capacity for the volume of data the business generates.

2. Software

Software is the set of programs that actually carries out the accounting functions — recording vouchers, maintaining ledgers, generating reports. It is the software that embodies the accounting rules (how a debit and a credit are applied, how a trial balance is drawn up) in a form the hardware can execute. (The different categories of accounting software — ready-to-use, customised and tailored — are studied as their own topic later in this chapter.)

3. People (Live-ware)

The people who operate the system — data-entry operators, accountants, system administrators, and the auditors and managers who use its output — are as essential a component as the machine itself. A computer system is only as accurate and useful as the people who feed data into it and interpret what comes out of it; this human element is often called the "live-ware" of the system, as distinct from the hardware and software.

4. Procedure

Procedure refers to the set of instructions, manuals and established steps that govern how the system is to be used: how a voucher is to be prepared and authorised before entry, in what sequence data is to be entered, how often backups are to be taken, who is authorised to access or alter what data, and so on. Clear procedures ensure that different people using the same system, at different times, still produce consistent, reliable results.

5. Data …