Q.Describe the components of a Computerised Accounting System.

This is a standard essay question in TS Inter II year Accountancy that requires naming and briefly explaining each of the five components a CAS is built from.

Hardware is the physical equipment, software is the programs that carry out accounting processing, people/live-ware are the staff who operate the system and use its output, procedure is the set of rules governing how the system is used, and data is the actual transaction facts entered into the system.

A Computerised Accounting System functions as a coordinated whole made up of five components, each of which is essential; the system as a whole cannot work properly if any one of them is missing or weak.

The first component is hardware — the physical, tangible equipment on which the accounting software runs, including the computer itself (processor, memory and storage), input devices such as a keyboard, mouse or scanner, output devices such as a monitor and printer, and networking equipment where several computers need to share the same accounting data; the hardware must have adequate processing speed and storage capacity for the business's transaction volume. The second component is software — the set of programs that actually performs the accounting functions of recording vouchers, maintaining ledgers and generating reports, embodying the accounting rules (such as how a debit and credit are applied, and how a trial balance is drawn up) in a form the hardware can execute. The third component is people, often called the live-ware of the system — the data-entry operators, accountants, system administrators, and the auditors and managers who use its output; a computer system is only as accurate and useful as the people who feed data into it and interpret what comes out of it. The fourth component is procedure — the instructions, manuals and established steps that govern how the system is used, including how a voucher is to be prepared and authorised before entry, the sequence in which data is entered, how often backups are taken, and who is authorised to access or alter particular data; clear procedures ensure that different people, using the same system at different times, still produce consistent, reliable results. The fifth component is data — the actual raw transaction facts (date, amount, accounts affected, narration) that are fed into the system and processed, according to the procedures laid down, using the hardware, under the control of the people operating it, to produce the final accounting information.

Students frequently forget 'procedure' as a distinct component and describe only hardware, software, people and data — leaving out the rules/manuals that govern how the system is actually to be used and controlled.