AN EVOLUTION OF THE IMPACT OF COMPUTERIZATION ON THE ACCOUNTING SYSTEM OF SMALL SCALE BUSINESS ORGANISATION (A CASE STUDY OF MODEL COMPUTERS COMPANY WARRI DELTA STATE)
ABSTRACT
The development of accounting systems and the computerization of these systems in a small scale business environment is the main theme of this study. The researcher examined the issues involved by understanding the computerized accounting system of model computers company, Warri.
Based on the analysis of data for this study it was discovered that an effective and efficient operating environment is function of a good accounting system other things being equal. Similarity it was discovered that the introduction of computer and the development of accounting packages have revolutionized the accounting system of small scale business organisation.
Therefore the general conclusion drawn from this study is that a computerize accounting system is a basic paradigm for small scale business organisations.
LIST OF FIGURES
Fig. 4 – 1 Mcc organisation chart
Fig 5 – 1 Daceasy system interface
Fig 5 – 2 Customer module
Fig 5 – 3 Uendor module
Fig 5 – 4 Product module
Fig 5 – 5 General ledger module
Fig 5 – 7 Fixed asset module
Fig 5 – 8 Purchase order module
Fig 5 – 9 Invoicing module
Fig 5 – 10 Financial module
Fig 5 – 11 Default layout of accounts
Fig 5 – 12 Chart of account
Fig 5 – 13 Model chart of accounts
Fig 5 – 14 Fixed assets list
Fig 5 – 15 Current trail balance
Fig 5 – 16 Current profit and loss financial report
Fig 5 – 17 Period balance sheet
TABLE OF CONTENT
CHAPTER ONE
General Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 Objectives of the study
1.4 Significance of the study
1.5 The scope of the study
1.6 Research limitations
1.7 Definition of terms
CHAPTER TWO
Review of related literature
2.1 Introduction
2.2 Accounting information system
2.3 Computer technology and accounting
2.4 Computer application for small business
Note
CHAPTER THREE
Research methodology
3.1 Nature of the study
3.2 Sources of data
3.3 Method of data presentation
CHAPTER FOUR
Model – A company presentation
4.1 Historical background
4.2 Organizational structures
4.3 The accounting system of model computers company
CHAPTER FIVE
Dave presentation
5.1 Basic issues
5.2 Daceasy accounting package
5.3 Computerization at MCC
5.4 Daceasy and basic accounting operations
CHAPTER SIX
Findings, summary and conclusion and recommendations
6.1 Findings
6.2 Summary and conclusion
6.3 Recommendations
BIBLIOGRAPHY
CHAPTER ONE
GENERAL INTRODUCTION
1.1 BACKGROUND OF THE STUDY
An accounting system has been described as an integrated frame work within on entity (such as business firm) that employs physical resource (ie material, supplies, personnel, equipment, funds) to transform economical data into financial information for (a) conducting the firms operation and activities and (b) providing information concerning the entity to a variety of interested users.
An accounting system has all the elements or characteristics of a system such as inputs, processes, outputs, controls and feedback. Davis of al write that “system is the anatomy of accounting.” It domain comprises the entire financial dimensions of business operations, including the flow of financial intelligence throughout the organisation and beyond.
The objective of accounting system is to provide an integrated and accumulated information that should assist management in making decisions for the effective and efficient execution of the goals of the organisation. An accounting system should be able to identify, assemble, classify, record, and report an entity’s transactions and to maintain accountability for the related assets and liabilities. In order to accomplish these objectives, the system should have sufficient and appropriate methods and records.
The advents of this computer and the Manufacting of accounting software have revolutionized accounting operation, Davis et al writs that computer system owe much of their acceptance in business to the increased speed and efficiency that they provide for data processing and reporting. They went further to state that computer systems has increased the accuracy, efficiency and timeless of reporting which can be most helpful in improving the decision making activities of management.
Giving the present trend in technology as it affects accounting operations, it would be important to evaluate the impact of computerization the accounting system of small- scale businesses is critical to the success of the information system Nic sulliuan has called for a proper study and analysis before the adoption of computer technology.
Corroboration the view of Sulliuan, Massey 7 walled a caution signal by calling for the need to weigh the benefits and shortcomings inherent in adopting computer technology in the accounting system of small – scale businesses. Although this revolution in accounting practice represents a significant technological shift, the need for evaluating the relevance of computerization cannot be downplayed.
1.2 STATEMENT OF THE PROBLEM
The operation of accounting systems in small-scale business organisations is fraught with numerous control problems and ineffectiveness which have, in most cases, produced dysfunctional effects on business operations. Similarly, the enormities of the operational, countervail an strategic problems of computerization have compounded the problem of faulty accounting system in small scale business organisations.
As a result, the researcher shall focus on the following research questions in evaluating the accounting systems of the case study:
i) How effective and what are the control problems confronting the accounting system?
ii) How justified and relevant is the computerization of the accounting systems given the level of operation, cost and benefit?
iii) How effective has the company addressed the operational, contextual and strategic problems imposed by the computerized accounting system?
1.3 OBJECTIVES OF THE STUDY
The objectives of this study are:
1) To evaluate the accounting system of model company so as to determine their appropriateness, adequacy and effectiveness.
2) To examine its operation and the cost and benefit of computerization so as to determine the plausibility or otherwise of adopting computer technology in its accounting system.
3) To examine the operational, contextual and strategic problems inherent in the computerization of accounting systems so as to determine how the company has effectively tackled these problems.
4) Finally, to make such recommendation as in considered necessary to raise the level of operating environment of the company.
A number of other objectives, which are related to the aforementioned objectives may also be pursued alongside these objectives.
1.4 SIGNIFICANCE OF THE STUDY
Aptly stated, the essence of this study is set forth within the context of the need to document relevant information on the impact of computerization on the accounting systems of a small scale business organisation as a further contribution to the literature on small business.
Moreover this work could serve as a reference point for other researchers who may be interested in computerization of accounting systems and other related areas of study.
Particularly, the recommendation, which shall be the output of this research will be of great importance to the management of model computers company in terms of directing attention to lapses in operation.
Finally, the study itself may be significant in more ways than have already been enumerated but the above will suffice for the present.
1.5 THE SCOPE OF THE STUDY
The study, in no way attempted to consider all the systems in model computers company neither did it attempt to explore all available accounting software. Rather, it attempted to evaluate the accounting systems and those systems, which directly or indirectly bear on the accounting systems.
In evaluating the impact of computerization on the accounting systems, the study focused only on Daceasy Accounting software used by model computers company.
1.6 RESEARCH LIMITATIONS
In carrying out a research a research study of this nature, certain limitations are bound to be inherently present. Accessibility to adequate and reliable data for analysis was one of the limitations of this study. Time and the geographical distance of the case study were also constrains on the research.
Moreover, other academic commitments were also demanding on the time of the researcher and had to be attended to, sometimes to the total neglect of this work.
1.7 DEFINITION OF TERMS
The following terms were used in this research work in the context of the definitions given:
1) System: This is an organized combination of ports, which form a complex entity, with interrelationships or interactions between the ports and between the system and the environment.
2) Management information system: This is an integrated manual and/or computer system that provides information to support the operations, management and decision making functions of an organisation.
3) Accounting system: This is a subsystem of the management information system and it encompasses the processes and procedures by which an organisations financial information is received, registered, recorded, handled, processed, stored, reported and ultimately disposed, of. The accounting system is used interchangeably with the term accounting information system.
4) Computerization; This refers to an on-going process whereby computer and computer technology are introduced and adopted.
5) Software: This term relates to all the different types of program used on computer systems, complementing the hardware, within which it is inanimate and unable to function.
6) Integrated accounting software: This is a suite of accounting packages. Each separate program is linked with others within the suite, so that data input only needs entry into one of the programs for its effect to be recorded automatically in the other relevant programs throughout the suite.
7) Small scale business: This refers to those businesses which owner has control of the business himself and actively participate in all aspects of the management of the business and in all major decision – making process. And which influences in the market in terms of prices or goods sold is not significant.
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