Question

What are the different phases of accounting cycle which can be processed through the use of computers?

Hint:

Using accounting software minimizes manual errors and speeds up all phases of the accounting cycle.

Answer 1

The accounting cycle through computerized systems typically consists of the following phases:
[(i)] Source Document Input: Collection and entry of business transaction details into the system using vouchers, invoices, etc.
[(ii)] Recording Transactions: Entries are made in the journal automatically through predefined templates.
[(iii)] Posting to Ledger: The software posts journal entries to respective ledger accounts automatically.
[(iv)] Trial Balance Preparation: A trial balance is generated instantly, showing the correctness of recorded data.
[(v)] Adjustments: Necessary adjusting entries (depreciation, outstanding expenses, etc.) are made before closing.
[(vi)] Final Accounts Preparation: The system generates Trading, Profit & Loss Account and Balance Sheet.
[(vii)] Reports: Various financial reports are prepared using built-in templates such as cash flow statements, ledgers, etc.