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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

As the manager of a Papa Sean鈥檚 restaurant, you must deal with a variety of business transactions. Give an example of a transaction that has each of the following effects on the accounting equation: a. Increase one asset and decrease another asset. b. Decrease an asset and decrease equity. c. Decrease an asset and decrease a liability. d. Increase an asset and increase equity. e. Increase an asset and increase a liability

Polk Street Homes had the following cash transactions for the month ended July 31, 2018.

Cash receipts:

Collections from customers $ 25,000

Issued common stock 13,000

Cash payments:

Rent 500

Utilities 2,000

Salaries 1,500

Purchase of equipment 25,000

Payment of cash dividends 4,000

Cash balance, July 1, 2018 14,000

Cash balance, July 31, 2018 19,000

Prepare the statement of cash flows for Polk Street Homes for the month ended

July 31, 2018.

Centerpiece Arrangements has just completed operations for the year ended December 31, 2018. This is the third year of operations for the company. The following data have been assembled for the business: Insurance Expense \( 4,500 Salaries Expense \) 46,000 Service Revenue 70,000 Accounts Payable 17,600 Utilities Expense 1,400 Office Supplies 1,700 Rent Expense 16,000 Dividends 4,800 Common Stock 9,000 Accounts Receivable 8,000 Cash 7,200 Equipment 12,100 Retained Earnings, January 1, 2018 5,100

Preparing the income statement Prepare the income statement of Centerpiece Arrangements for the year ended December 31, 2018.

How does retained earnings increase? What are the two ways that retained earnings decreases?

Tiny Town Kennel earns service revenue by caring for the pets of customers. Tiny

Town Kennel is organized as a corporation. During the past month, Tiny Town

Kennel has the following transactions:

a. Received \(520 cash for service revenue earned.

b. Paid \)325 cash for salaries expense.

c. Received a \(1,000 contribution in exchange for common stock.

d. Earned \)640 for service revenue, but the customer has not paid Tiny Town

Kennel yet.

e. Received utility bill of \(85, which will be paid next month.

f. Cash dividends of \)100 were paid to stockholders.

Indicate the effects of the business transactions on the accounting equation for Tiny

Town Kennel. Transaction (a) is answered as a guide.

Increase asset (Cash); Increase equity (Service Revenue)
See all solutions

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