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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 – Hardware and Software

Example of hardware – Monitor, Keyboard, Mouse, etc.

Examples of software – Operating system, Antivirus, etc.

Recommended entry-level software – QuickBooks

Step by step solution

01

Basic components of computerized accounting

The two basic components of computerized accounting are as follows –

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 –

Monitor

Printer

Mouse

Keyboard

CPU etc.

b) Software –

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 –

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

Using the following information, complete the income statement, statement of retained earnings, and balance sheet for DR Painting for the month of March 2018. The business began operations on March 1, 2018. Accounts Receivable \( 1,400 Salaries Expense \) 800 Accounts Payable 1,000 Service Revenue 7,000 Cash 22,300 Office Supplies 1,800 Stock issued during March 40,000 Truck 20,000 Dividends paid during March 1,500 Utilities Expense 200

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Amos Sharp recently opened his own accounting firm on October 1, which he operates as a corporation. The name of the new entity is Amos Sharp, CPA. Sharp experienced the following events during the organizing phase of the new business and its first month of operations in 2018. Oct. 5 Sharp deposited \(45,000 in a new business bank account titled Amos Sharp, CPA. The business issued common stock to Sharp. 6 Paid \)300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, \(6,500. 10 Consulted with tax client and received \)3,300 for services rendered. 11 Paid utilities, \(340. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, \)16,000. 18 Paid office rent, \(1,800. 25 Received amount due from client that was billed on October 12. 27 Paid full amount of Accounts Payable created on October 7. 31 Cash dividends of \)3,800 were paid to stockholders. Requirements 1. Analyze the effects of the events on the accounting equation of Amos Sharp, CPA. Use a format similar to Exhibit 1-6. 2. Prepare the following financial statements: a. Income statement. b. Statement of retained earnings. c. Balance sheet
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