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Chapter 1: AB-13SE (page 36)

Ned Timmons, engineer, is considering using a computerized accounting system for his professional engineering business. Ned has asked that you help him understand the components of a computerized accounting information system by answering the following questions:

Requirements

1. What are the two basic components of a computerized accounting information system?

2. Provide examples of each component.

3. If Ned were interested in an entry-level software system, what software might you recommend?

Short Answer

Expert verified

Two Components 鈥� Hardware and Software

Example of hardware 鈥� Monitor, Keyboard, Mouse, etc.

Examples of software 鈥� Operating system, Antivirus, etc.

Recommended entry-level software 鈥� QuickBooks

Step by step solution

01

Basic components of computerized accounting

The two basic components of computerized accounting are as follows 鈥�

a) Hardware: - hardware is the component that can be seen and touched. It is also fragile in nature and can be broken. Hardware is like a body to the computerized system.

b) Software: - Software is the component that runs in the backend process and can not be seen or touched. Software is a predetermined program that makes the computer run. All the instructions and processing are done through software.

02

Examples of each component

a) Hardware 鈥�

Monitor

Printer

Mouse

Keyboard

CPU etc.

b) Software 鈥�

Operating System

Applications based Programs

Firewall

Antivirus etc.

03

Recommended software for Ned

There are two levels of software for the computerized accounting system. They are 鈥�

i) Entry Level Software

ii) ERP System

Entry Level Software is used by a small business that has a limited volume of transactions and requires an economic system. On the other hand, Enterprise Resource Planning (ERP) is a customized solution for large and big organizations.

In the given case as Ned is interested in entry-level software, the most recommended software would be QuickBooks. This is so because QuickBooks is the latest entry-level software that is used on large scale and is easy to install and run. It also requires less time to learn the software. The complexity is also lower as compared to other entry-level software.

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Most popular questions from this chapter

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Exeter is a building contractor on the Gulf Coast. After losing a number of big lawsuits, it was facing its first annual net loss as the end of the year approached. The owner, Hank Snow, was under intense pressure from the company鈥檚 creditors to report positive net income for the year. However, he knew that the controller, Alice Li, had arranged a short-term bank loan of $10,000 to cover a temporary shortfall of cash. He told Li to record the incoming cash as 鈥渃onstruction revenue鈥� instead of a loan. That would nudge the company鈥檚 income into positive territory for the year, and then, he said, the entry could be corrected in January when the loan was repaid. Requirements 1. How would this action affect the year-end income statement? How would it affect the year-end balance sheet? 2. If you were one of the company鈥檚 creditors, how would this fraudulent action affect you?

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