Accounting For Computer Hardware And Software

Published Date: 02 Nov 2017

Introduction:

Nowadays the economy is shifting from the focal point of manufacturing processes (tangible outputs) to a focus on information technology flow (intangible outputs). As a result, the accounting for computer software products becomes increasingly important and the issue of solving software/hardware evaluation problem is coming up due to many different criteria that must be considered in order to reach a recording decision. In this report will discuss accounting for computer hardware and software. The best programs and devices that can use in any business that aims to improve and increase the control over the accounting business. When these hard/software can automate the regular tasks which includes keeping records and completing statutory returns, the business will save time and reports can be generated to enable run the business in better way.

Problem of the study:

Companies may either purchase new computer software or create it for external use, such as spreadsheet applications, Excel and Lotus, or for internal use to establish a better internal accounting system.

The main problem of this paper is to show how should accounts for the costs of developing software? Should they capitalize and amortize such costs in the future or expense them immediately? Another problem may arise is the decision of selection the best software among many software products for the accomplishment of a specific task. Should they decide to develop a new program or to acquire existing software with similar requirements?

IMPORTATNCE of the study:

The method of measuring the software and hardware should be known, and the recognition of an expense should be identified in addition to the disclosure requirements that it need. Based on that, the businesses that are going to succeed in the new world will be those that are the most swift, relying on accurate key performance indicators and data that can now be delivered in seconds, not days. Today’s accounting systems offer so much more; they are financial management solutions that are proven to improve operational efficiency and responsiveness. The importance of accounting software/hardware in a business to serve accounting needs among other requirements. The main benefits of computerized accounting is considered the reduction in the number of accounting personnel which Accountants needed to process transactions in their repetitive accounting work could be run through by computers in batches. Besides, the efficiency and reliability of computerized accounting that improve the efficiency of financial reports preparation and the accuracy of accounting data [1] . Nowadays, we can conclude that the right accounting software can help in improving the operating efficiencies and obtain some competitive advantages.

Objectives of the study:

The aim of this paper is to provide a platform in how to recognize the process of evaluating and selecting the software and hardware programs. And to understand the accounting treatment for computer hardware and software costs. To discuss the criteria of intangible assets when it may or should be recognized. Also, to assessing the performance of accounting information system as well as to strike the advantages and disadvantages of using computers in accounting. Focusing on Identify the impact of accounting information Systems to improve the performance of business companies and State the need for computerized accounting in Business. Differentiate between manual accounting and computerized accounting. Describe the main requirements of computerized accounting.

Computer and Electronic accounting system:

In the present days, we can see the expansion of business in number of transactions increased over the world. The manual method of keeping and maintaining records was found to be unmanageable. With the introduction of computers in business, the manual method of accounting is being gradually replaced. Finally, the database technology has revolutionized in the most accounts department of the business.

We find that Accounting plays a critical role in the success or failure of contemporary business institutions in most of countries, as accounting systems are responsible for recording, analyzing, monitoring and evaluating the financial condition of companies, preparation of documents especially for tax details, providing information Support for many other organizational functions, and so on. Prior to the release of personal computers, businesses were limited to manual methods for keeping track of financial data. According to (Tavakolian 1995), the manual accounting systems consisted of paper ledgers, typewriters and calculators. Typewriters were used to type invoices and cheques, and all calculations were performed using calculators. However, with this system it was possible for errors to be introduced into the data since they could go undetected for quite some time. Like other industries, the accounting industry has changed and distinguished with the arrival of personal computers. A computerized accounting system is able to run and manage financial data efficiently, but the true value of an accounting system was that it was able to generate immediate reports regarding the company. [2] 

An accounting information system (AIS):

An accounting information system (AIS) is a structure that be used in a business especially in the large firms in centralized system of branch accounting. it uses to collect, store, manage, perform, restore and report its financial data so that it can be used by accountants, consultants, business analysts, managers, chief financial officers auditors and tax agencies. In particular, the specialized trained accountants work with AIS to ensure the highest level of accuracy in a company's financial transactions and recordkeeping and to make financial data easily available to those who need access to it, all while keeping data right and secure. This article will describe the primary components of AIS and some of its real-life applications.

In the electronic accounting, software component of an accounting information system ( AIS) is the computer programs used to store, restore , perform and analyze the company's financial data. Before there were computers, AISs were manual, paper-based systems, but nowadays, we can find that most companies are using computer software as the basis of the AIS. Small businesses might use detects QuickBooks, Sage Peachtree Accounting, or Microsoft's Small Business Accounting but there are many others. Small to mid-sized businesses might use SAP's Business One. Mid-sized and large businesses might use Microsoft's Dynamics GP, Sage Group's MAS 90 or Epic or Financial Management.

Quality, reliability and security are key components of effective AIS software. Managers rely on the information it outputs to make decisions for the company, and they need high-quality information to make sound decisions.

What do we mean by Electronic Accounting? This term used it to describe an accounting system that mention especially on computer technology for capturing and processing financial data in organizations. In the literature, two more terms have been used to describe Electronic accounting: computer-based Accounting System and Accounting Information System (AIS). (Stefanou 2005) mentioned that although accounting information system does not require a computer to function, the computerization of the accounting function, the term AIS is used to stand for the computer-based AIS. In this study, the terms Electronic Accounting and financial information system are used to refer to any accounting system that depends on Information and Communication Technology (ICT) for performing its information system functions. [3] 

Hardware machines in accounting:

When we read or hear about accounting software, we know immediately what it means by this. However, when we talk about accounting hardware, you will mention to Calculators or Cash counting machine and so on. Hardware is also important, as software accounting we can sum up accounting hardware are those things that facilitate accounting work and are used by many organizations and in the big firms and companies in its centralized systems of branch accounting. What do we mean by Hardware accounting? Hardware here refers to the physical components of a device or system as all physical device connected with a computerized accounting system is referred to as hardware. We install Computerized accounting systems with computers to run the systems. In the past before inventing of Computers and release accounting’s Software, we use the traditional hardware for accounting for example, Cash counting machine, Stamps, Checkbooks, Calculators and The IBM Electric Punch which can provides the means of Interlocks prevent depression of more than one Transcribing information from original documents of these punching keys at one time. . It establishes the secords to be may be specified to operate from one of the Handled by all other IBM Accounting Machines; following four power supplies. [4] 

We have tried the manual accounting or the traditional way in accounting and we have used the manual accounting, which requires maintaining books of accounts such as Journal, Cash Book, and ledger. The accountant have to perform a review or summary of financial statements manually. Nowadays, the new technology has done everything in the accounting as modern technology involves various machines that enable in preparing different accounting functions, we will mention to many machines used in the accounting which may related with Computers or can prepare accounting tasks as a free without any connection to Computers, for examples, , a billing machine. This machine can compute discount and add net total and posting the necessary data to the related accounts. With alternative increase in the number of tasks, a machine was developed which could store and process accounting data in no time. Such advancement leads to number of growing successful firms.

For a Large accounting systems: it consist of numerous modules and require computers with fast processors and large storage capacity. A newer version of machine is released with increased speed, storage, and processing capacity. A computer to which they were connected operated these machines. As a result, the maintenance of accounting data on a real-time basis became almost essential. Now maintaining accounting records become more convenient with the computerized accounting. The computerized accounting uses the concept of databases. For this purpose an accounting, software is used to implement a computerized accounting system. We can mention to the define of a systems operational as one that is an essential to the functions of hardware or software that controls the hardware and makes it launch. [5] 

Specialized Hardware for Tax & Accounting Firms:

Much of the rapid growth in the last few years has been over the development and continuing paperless practice tasks and the Phenomenon of "Cloud computing", this idiom refers to do everything of our works or tasks on computers including specialization tax and accounting systems. On the other hand, we can mention to general office programs (word, Excel and Access) data storage and collaboration tools and so on.

We cannot deny that software concerning with accounting is so important and consider as innovative new notions that greatly affected on accounting practices and business in general. On the other hand, we cannot do without Hardware that play an equal rule beside Accounting’s software, can we operate any software without we have hardware. To summarize our saying we say, without a physical device and keyboard, the software would be nonsense. We will refer to some of new hardware innovations that may that related with accounting practice as following:

Spot billing machine: Spot billing machine it considers as hand held computers manufactured by M/s Lampex Electronics Ltd are specially designed for billing applications. The electronic circuits are designed to allow for easy customizing of billing applications. The units have rugged printers attached for data such as bills etc, for printing on the spot.

Advantages of Spot billing machine: it is Simple to operate, steep construction, Long charge life of batteries ,Adequate Data backup, Automatic uploading of data with linked to PC and Built-in printer.

Multi-screen monitors: a lot of specialized have been promoting the use of multiple monitors for years, especially in a few key professions especially financial and accounting. The benefits of Multi-screen monitors include a high increase in productivity, and that is not just taking the word of the companies that make these multi-monitor displays. Research shows efficiency boosts of up to 40 percent, many accountants who love the systems in their practice, especially during tax season and for write-up. With two monitors, they can have their tax prep system on one-screen and source documents on another, aiding data entry and review. With three monitors, you can also view tax research or a spreadsheet.

Scanners/printers & multi-function devices: since the large practices that be more obvious in the present days, it has varying workflows and some differences in technology needs, many find the same products to be useful. A practice with fewer than five professional staff, for instance, may not need a high-end dedicated printer and scanner and will find the use of multi-function machines on their desktops to be useful.

Samsung — CLX-3175F: this device is manufactured by Samsung’s wireless 3175 multi-purpose device offers great convenience and it isn’t need for network cords running everywhere, automatic document feeder, fax and copy functions. The 3175 also has one-button options for printing, copying and scanning directly to a USB flash drive

DYMO — Label Writer Twin Turbo: The Twin Turbo even allows two sizes of labels to be loaded at the same time in the device, with 55 page-per-minute speed, high resolution laser output, and direct integration with Word, Outlook, QuickBooks and ACT!.

High volume scanners: most tax preparation vendors are adding some form of auto-populate or at least auto-organize/work paper compilation functions, scanners are essential to making use of these innovations. For firms with a dedicated administrative staffer who collects client documents up front, a centralized group scan workflow may be the best method of processing these items.

Fujitsu — FI-6130 Sheet-Fed Scanner: In addition to its desktop/mobile ScanSnap, Fujitsu) offers several workgroup and heavy production scanners, including the new FI-6130 Sheet-Fed model. The 6130 scans up to 40 pages per minute with 600 DPI resolution, and includes a 50-sheet feeder tray, duplex capabilities and Adobe Acrobat Standard.

Computers accounting software:

Hardware without software is nonsense and software without hardware is nonsense also, we can refer to Software as the core of a computerized accounting system. The software component consists of units, or smaller, stand-alone programs. Each individual unit of software performs a variety function. The units can include production, customer, general ledger,, asset management, financial management, transactions or purchasing and inventory management modules. All modules link with one other for data sharing. A typical accounting process integrates all the modules of a computerized accounting system, with each one maintaining data for specific tasks and works.

We have a look to the beginning for the birth of the software accounting issue, it is the issuance by the Association of Data Processing Service Organizations Association of Data Processing Service Organizations, "Accounting Guidelines for the Computer Services Industry," Exposure Draft, April, 1982. [6] 

In any big firm, there are accounting software packages can be purchased by a firm that will perform many of their tasks that would normally be manually entered by the person responsible for the firm's accounts. These packages capable of producing many of the accounting records that were produced by hand in the past. The accounting department in any firm enter the Transactions by these computer package and many will produce the double entry records based on this one entry. Although the exact capabilities of each package will vary, it is possible that most, if not all of these packages will be able to produce invoices for purchases and sales. They calculate returns, discounts and all the other areas of the accounting information system. Finally, we can say that these packages manage and produce the final accounts for the business o for the firms and companies when required.

in the large firms like DELL, Hp Vodafone , Qutel, Qatar Gas, Pepsi and ETC…. Accounting software can actually be tailor-made for the firm's own specific requirements. This sort of tailor made package is known as a 'bespoke' system. As these companies, demand a private an accounting software for its firm. A specialist computer software firm who have experience in producing accounting packages normally produces these packages. Technically, these packages are available for any firm who want this program from the specialized account, but given the expense of a bespoke system and the general low cost of a system one that can be used by any firm, most firms will simply purchase a general package. Most firms will make some use of a computer within accounting at some point. Some firms will have all their accounting performed by computers. What we need to understand is how the computer can be used.

The portion of the cost of a record master born by the record company shall be reported as an asset if the past performance and current popularity of the artist provides a sound basis for estimating that the cost shall be charged to expense. The amount recognized as an asset shall be amortized over the estimated life of the recorded performance using a method that reasonably relates the amount to the net revenue expected to' be realized.

Top Computers accounting Software:

As we say above that there is a private programs are known as ‘bespoke’ system in the large firms. Here we present many brands or types of accounting software applications on the market today. Some applications are made to perform accounting functions for large corporate firms, while others are meant for small business or personal use. Businesses,. Available software ranges from the very simple to the very complex, with much variation in price as well.

QuickBooks: QuickBooks is one of the oldest and earliest accounting software to appear in the market. It has managed to hold on to its position; it is suited for managing small business accounting and finances. It can operate in any operating system that you run. it has many advantages and features like pay bills & track sales & expenses, create estimates & invoices, Tools for payroll & tracking employee time, Manage customers, vendors & suppliers Track Income & Expenses are included. Credit card acceptance is also included. It has also a Cash Flow management that is considered is one of the strong points of QuickBooks. Cash flow management is the also the key to ensuring smooth functioning of an organization.

STFB: this product is too expensive, so it develops and markets - Integral Accounting Enterprise, a complete accounting & ERP system with source code and distribution rights. Based on ASP.Net, Visual Basic.Net based platforms. Integral Accounting Enterprise is perfect for developers; Consultants Priced at $9999.99 is an expensive product.

SAP Business One: this product has a good fame over the world, as it has 18000 plus installations around the world. SAP Business one 2005, is supposed to be easier in using and has better quality and the possibility of supporting. SAP Business one is targeted at the small organizations and midsize companies.

Oracle Financials: Oracle Financials is part of the Oracle E-Business Suite. This product is no longer for enterprise-wide daily business intelligence that lets you make more informed decisions, improve operations, and reduce costs and meet a 360-degree view of your customers. Oracle Financials, running on Oracle technology, gives you industry-leading performance and scalability.

Siemens: Siemens is an Indian popular destination for those undergoing training in SAP. They are popular with reference to FICO the financial module of SAP. Training charges are high but they are known to provide an utmost quality training. Students should be provided by extensive hands on training. The setup and facilities make it easier to write the FICO exam. A FICO certification is necessary for industry recognition.

Every organization or company look to these accounting software programs that There is some evidence to suggest that accounting policy can affect expansion and the ability to raise capital so, it choose between the cheapest and best software account to perform their business. While it was easy to expense relatively minor software costs in the past, for reasons of materiality, it has become increasingly difficult to state emphatically that software expenditures are immaterial when they continue to increase every year. [7] 

Assessment the performance of accounting information systems:

computerized accounting systems are designed to function and perform independently of manual interference, Human operators and accountants are required to feed in the financial data, before they worked on by the computerized system. According to the book "Fraud Auditing and Forensic Accounting," other key personnel in a computerized accounting system include skilled change control, database managers, security personnel and management. Collectively, these elements you have to need in your work to ensure the delicate functioning of the computerized system and provide troubleshooting capabilities when the need arises in your business.

After we have finished of mentioning to the importance of hardware and software in computerizing accounting. We aimed in this part to refer to some research or studies that aimed at identifying the evaluation of accounting information systems performance used in the large firms or some companies In order to achieve the objectives of our study.

Banker et al. (2002): we find in their study the Impact of Information Technology on Public Accounting Firm output. they focused on five offices of an international public accounting firm that recently made large IT investments around the world , especially in audit software and Knowledge-sharing applications. Both Quality and Quantity of information from the research site are analyzed to estimate the change in productivity following the implement of IT. They have concluded the results from both retraction analysis and Data Envelopment Analysis indicate significant productivity gains impact of IT in a public accounting firm. [8] 

Sajady et al. (2008) in their study, they evaluated the efficiency and effectiveness of accounting information systems of finance managers of many listed companies at Tehran stock exchange. They have found that the results indicate that there is a positive correlation between the fulfillment of accounting information systems at these companies and the improvement of managers’ decision-making process. An internal controls and the quality of the financial reports and facilitated the process of the company’s transactions. in their result, they did not show any indication that performance evaluation process had been improved. [9] 

Salehi and Abdoreza (2011) they focused on reviewing the barriers in implementation by postulating six hypotheses of accounting information system (middle managers, human resources, organizational structure, environmental factors, financial issues and organizational culture) in companies listed on Tehran Stock Exchange. They have found out that their results were obtained as the following : barrier of organizational structure with 26 %, middle managers with 26 %, human resources with 25 %, environmental factors with 21 %, organizational culture with 19 % and finally financial issues with 16 % were identified as barriers factors influencing on the establishment of accounting information systems in listed companies on Tehran Stock Exchange. [10] 

The advantages and disadvantages of using computers in accounting:

Computers have started to be important devices in the accounting in the last few years. After computers had become cheaper, easier to use, and more powerful, a lot of large firms and many companies have decided to computerize their own accounting records..

We find in all fields supporters and opponents for the Object. Therefore, we will refer to the both of views and the reasons that support their point of view.

Advantages of using computers within accounting as follows:

Increased accuracy: we have not found any errors during using Computers but we know that the fault may be only from the person who entering the data into the computer.

Time saving: when we use Computers in the accounting that certainly lead to save our time as the use of a computer should be able to speed up the whole process of keeping accounting records. This is especially likely to be the case when the firm wishes to produce the final financial statements at the end of a period.

Performance analysis: if you have entered the data, you would have modified it as you want to produce variations on the firm's overall performance. Even a one spreadsheet can be modified to consider different scenarios. For example, any firm want to see the effects of an increase in sales of the overall profit level.

 Job satisfaction: using computers in accounting will due to free up time for the accountant to focus on more wide-ranging tasks. This means that there is likely to be increased job satisfaction within he firm. Studies suggest that if workers are more satisfied or more motivated in the workplace, they are likely to be more productive in their output.

Disadvantages of using computers within accounting:

The use of computers does not provide a perfect solution. There are defects associated with the introduction of computers.

Cost: if you want a private software to your firm, you will cost a lot of money as the prices of accounting software is too high. However, the cost of the computer and of any associated software packages can still present a large item of expenditure for the small firm. The purchase will not affect profits, but will affect the firm's cash flow position.

 Reliability: computers will not work constantly without Malfunction. the network or computers in your organization subjected to make a breakdown If the computer hardware or the software develops a fault, then it is likely that the whole system will not able to be used until the fault can be addressed.

 Training time: when you purchase a new version of accounting software, it may take more time for operators in your firm to be trained in using any accounting package on the computer.

finally, we can say that the development of computer software are complexity and reliability , as each of these factors impact each step of the software life cycle. [11] 

Conclusion:

Most of large firms and companies have used the computerized accounting but every organization differentiate in the software accounting in the using concept of databases. An accounting, software is used to implement a computerized accounting system. It is basic software, which allows access to the data contained in the database. The fact that nearly all firms make some use of computers in accounting suggests that the benefits strengthen the costs. Many firms have found computers a very valuable addition to their abilities in processing the large amounts of finical data. However, no one can never estimate the benefits of having a skilled human operator who understands the accounting software system and can reason and use anticipation in a way that computer cannot do it.

Using accounting software in the companies can offer to business not only provides an early warning system but also indicates where management action is required. Financial accounts should be prepared by all small business on a monthly basis to maintain financial control.

everything have its positive sides and negative sides also, in the computerized accounting has positive and negative sides when we use it However, the negative sides is rare and not compare with the positive side of the computerized software. The right accounting software can help improve operating efficiencies and obtain some competitive Advantages. Spending some time on selecting the most appropriate accounting software for business will ultimately free up your time and save you money.