What a computerised accounting system is

A Computerised Accounting System (CAS) is accounting done on a computer. The business still records and analyses its transactions, but hardware and accounting software do the recording, posting and totalling. Out come the usual records and reports: day books and journals, the ledger, the trial balance, the Statement of Profit and Loss and the Balance Sheet. Computers give the business information quickly, accurately and on time, and that sharpens its competitive edge.

Exams often ask for the five pillars (components) of CAS. Think of what you need to do accounts on a computer:

• Procedure: the step-by-step order of actions to follow for each task.
• Data: the raw facts and figures fed into the computer.
• People: the users who operate it.
• Hardware: the physical parts: computers, printers and other peripherals, and the network that joins them.
• Software: the programs: system software, and application software such as the accounting package.

Two words to keep apart. Data is raw facts. A data item is the smallest named unit of data; one transaction has four: account name, accounting code, date and amount. When data is processed to meet a decision-maker's need, it becomes information. Days worked and the rate per day are data; days × rate, the amount to pay the worker, is information.

The accounting cycle does not change when the computer arrives: analyse the transaction, journalise it, post to the ledger, prepare the trial balance, pass adjusting entries, prepare the adjusted trial balance, then the final statements. CAS simply runs the same cycle by computer, much faster.