CBSE Class 11

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy Chapter 16 Accounting for Not-for-Profit Organisation Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Accounting for Not-for-Profit Organisation NCERT Solutions for Class 11 Accountancy Chapter 16

Accounting for Not-for-Profit Organisation System Questions and Answers Class 11 Accountancy Chapter 16

Test Your Understanding-I (Page No. 20)

Question 1.
State with reasons whether the following statements are TRUE or FALSE –
(i) Receipt and Payment Account is a summary of all capital receipts and payments.
(ii) If there appears a sports fund, the expenses incurred on sports activities will be shown on the debit side of Income and Expenditure Account.
(iii) A credit balance of Income and Expenditure Account denotes excess of expenses over income.
(iv) Scholarships granted to students out of funds provided by Government will be debited to Income and Expenditure Account.
(v) Receipt and Payment Account records the receipts and payments of revenue nature only.
(vi) Donations for specific purposes are always capitalized.
(vii) Opening balance sheet is prepared when the opening balance of capital fund is not given.
(viii) Surplus of Income and Expenditure Account is deducted from the capital/general fund.
(ix) Receipt and Payment Account is equivalent to Profit and Loss Account.
(x) Receipt and Payment Account does not differ with capital and revenue receipts.
Answer:
1. (i) False-Because Receipt and Payment Account is a summary of all cash transactions whether they are capital receipts and payments or revenue receipts and payments.
(ii) False – Because Sports Fund is a special fund of capital nature, so the expenses incurred on sports activities will be deducted from Sports Fund in the Balance Sheet.
(iii) True – Because excess of income over expenditure denotes surplus.
(iv) False – Because Funds provided by the Government is a capital nature, therefore scholarships granted out of funds directly deducted from this fund in the Balance Sheet.
(v) False – Because Receipt and Payment Account is a summary of all cash transactions whether they are capital receipts and payments or revenue receipts and payments.
(vi) True – Because donations for specific purposes are non-recurring in nature so they are always capitalized.
(vii) True – Because opening capital fund is must to ascertain the actual financial position of the organisation.
(viii) False – Because surplus of Income and Expenditure Account increases the capital/general fund of the organisation, so it must be added to capital/general fund.
(ix) False – Because Receipt and Payment Account is merely summary of cash transactions, it does not disclose any information regarding the income/deficit of the organisation.
(x) True – Because Receipt and Payment Account is a summary of all cash transactions whether they are capital receipts and payments or revenue receipts and payments.

Test Your Understanding-II (Page No. 29)

Question 1.
How would you treat the following items in the case of a ‘not- for-profit’ organisation?
(i) Tournament Fund Rs. 40,000. Tournament Expenses Rs. 14,000. Receipts from Tournament Rs. 16,000.
(ii) Table Tennis match expenses Rs. 4,000.
(iii) Prize Fund Rs. 22,000. Interest on Prize Fund Investments Rs. 3,000. Prize given Rs. 5,000. Prize Fund Investments Rs. 18,000.
(iv) Receipts from Charity Show Rs. 7,000. Expenses on Charity Show Rs. 3,000.
Answer:
(i) Here Tournament Fund is a specific fund. The accounting treatment is as under –

(ii) Table Tennis match expenses is independent of any specific fund. The accounting treatment is as under –

(iii) There is a specific fund i.e. Prize Fund. The accounting treatment is as under –

(iv) There is no specific fund regarding Charity. The accounting treatment is as under –

Do It Yourself (Page No. 25)

Question 1.
Subscriptions received by the health club during the year 2011 were as under-

Subscriptions Outstanding as on 31.12.2010 — 5,000
Subscriptions Outstanding as on 31.12.2011 — 12,000
Subscriptions received in advance in 2010 for 2011 — 5,000
Calculate the amount of subscriptions to be shown on the income side of Income and Expenditure Account.
Answer:

Question 2.
During the year 2011, subscriptions received by a sports club were Rs. 80,000. These included Rs. 3,000 for the year 2010 and Rs. 6,000 for the year 2012. On December 31,2010 the amount of subscriptions due but not received was Rs. 12,000. Calculate the amount of subscriptions to be shown in Income and Expenditure Account as income from subscription.
Answer:

Question 3.
Subscriptions received during the year ended December 31,2011 by Royal Club were as under –

The Club has 500 members each paying @ Rs. 200 as annual subscriptions. Subscriptions outstanding as on December 31,2010 are Rs. 6,000. Calculate the amount of subscriptions to be shown as income in the Income and Expenditure Account for the year ended December 31,2011 and show the relevant data in the Balance Sheet as on that date.
Answer:

Do It Yourself (Page No. 30)

Question 1.
Find out the cost of medicines consumed during 2010-11 from the following information –

Answer:

Question 2.
What amount of sports material will be posted to Income and Expenditure Account for the year ended March 31, 2012 as expenditure?

Answer:

Short Answer Type Questions

Question 1.
State the meaning of ‘Not-For-Profit’ Organisations.
Answer:
Meaning of‘Not-For-Profit’ Organisations – All trading and business organisations are profit organisations since their main objective is to earn profit. ‘Not-For-Profit’ Organisations are those organisations whose main aim objective is to provide services to their members or the society at large and not the earning of profits.

These organisations refer to the organisations that set-up for the welfare of the society, as a charitable institutions, which run without profit motive. Their main aim is to provide services to its members or the society at large. The funds raised by such organisations are represented as Capital Fund or General Fund. The main source of their income usually are subscription from their members, donations, grants, income from investment etc. These organisations keeps the accounting

records to meet the statutory requirements and controlling utilisation of their funds. They usually prepare them at the end of financial year to ascertain their income and expenditure and the financial position of the organisation and submit them to the statutory authority i.e. Registrar of Societies.

Question 2.
State the meaning of Receipt and Payment Account.
Answer:
Receipt and Payment Accounts – A receipt and payment account is a summary of cash transaction. It is prepared at the end of the accounting period from the cash receipts journals and cash payment journals. “Receipt and Payment Account is nothing more than a summary of the Cash Book (Cash and Bank transactions) over a certain period, analysed and classified under suitable heading. It is the form of account most commonly adopted by the treasures of societies, clubs, associations etc. when preparing the results of the year’s working.” – William Pickles

In other words, Receipt and Payment Account simply is a summary of cash and bank transactions under various heads. On the debit side, it begins with an opening balance of cash and bank and records all the items of receipts irrespective of whether they are of capital or revenue nature or whether they pertain to the current or past or future accounting period(s).

The payments are recorded on the credit side without making any distincition between items of revenue and capital nature and whether they belong to the current or past or future accounting period(s). It may be noted that this account does not show any non-cash item like depreciation. At the end of period, this account is balanced to ascertain the balance of cash in hand or cash at bank. The annual totals of various items of receipts and payments are found from their respective accounts in the ledger or from the Cash Book and are then entered in the Receipt and Payment Account.

Question 3.
State the meaning of Income and Expenditure Account.
Answer:
It is a nominal account of ‘Not-For-Profit’ Organisation equivalent to the profit and loss account of the trading concerns. The terms profit is substituted by the words excess of income over expenditure (surplus) and the loss is expressed as excess of expenditure over income (deficit). It reveals the surplus or deficit arising out of the organisation’s activities during an accounting period.

This account is prepared on accrual basis and includes only items of revenue nature. All the revenue items relating to the current period are shown in this account, the expenses and losses on the expenditure side (debit side) and incomes and gains on the income side (credit side) of the account. It shows the net operating result in the form of surplus or deficit, which is transferred to the capital fund shown in the balance sheet.

Question 4.
What are the features of Receipt and Payment Account?
Answer:
Features of Receipt and Payment Account –
(1) Real Account – It is a real account, so the rule of real account i.e. ‘Debit what comes in and credit what goes out’ is followed. Thus receipts are recorded in Debit side and the payments are recorded in Credit side.

(2) Summary of the Cash Book – It is a summary of the cash book. Its form is similar to cash book (without discount and bank column) with debit and credit sides.

(3) Shows amount irrespective of period – It shows the total amount of all receipts and payments irrespective of the period to which they pertain.

(4) No distinction between the nature (Capital or Revenue nature) – It includes all receipts and payments whether they are of capital nature or of revenue nature.

(5) No distinction between mode of transaction (Cash or Bank) – No distinction is made in receipts/payments made in cash or through bank. With the exception of the opening and closing balances, the total amount of each receipts and payment is shown in this account.

(6) Do not show non-cash items – Non-cash items like depreciation, outstanding expenses, accrued income etc. are not shown in this account.

(7) Opening and Closing Balances – The opening and closing balance in it respectively mean Cash in hand or Cash at bank in the beginning and at the end. The balance of Receipts and Payment Account must be debit being Cash in hand or Cash at bank, unless there is a bank overdraft.

(8) Does not reflect net income or net loss – This account does not tell us whether the current incomes exceeds the current expenditure or vice versa or in other words it does not give any information of net income or net loss.

Question 5.
What steps are taken to prepare Income and Expenditure Account from Receipt and Payment Account?
Answer:
The following steps are taken to prepare Income and Expenditure Account from Receipt and Payment Account –
(1) From the Receipt and Payment Account exclude the opening and closing balance of cash and bank as they are not an income.

(2) Exclude the items of capital nature as these are to be shown in balance sheet.

(3) Take out the revenue receipts only for the current year to be shown on the income side of Income and Expenditure Account. These are adjusted by excluding the amounts relating to the preceding and the succeeding
periods and including the amounts relating to the current year not yet received.

(4) Take out the revenue payments only the current year to be shown, on the expenditure side of Income and Expenditure Account. These are adjusted by excluding the amounts relating to the preceding and the succeeding periods and including the amounts relating to the current year not yet paid.

(5) Make the adjustments of non-cash items like –
(a) Depreciation on fixed assets.
(b) Provision for doubtful debts, if required.
(c) Profit or loss on sale of fixed assets etc.
For determining the surplus/deficit for the current year.

Question 6.
What is Subscription? How is it calculated?
Answer:
Subscription – It is the amount paid by the members of the organisation periodically so that their membership is not cancelled. This is the main source of income of ‘Not-For-Profit’ Organisations. Treatment –
(i) The total amount of subscription received during the accounting period is shown in the receipt side (Dr. side) of Receipt and Payment Account.

(ii) Subscription related to the current period shown in the income side (Cr. side) of Income and Expenditure Account. Amount of subscription to be shown in Income and Expenditure Account is calculated as follows :

(iii) Subscription Outstanding at the end of year is shown on the assets side of Balance Sheet and subscription received in advance in current year for the next year is shown on the liabilities side of the Balance Sheet.

Question 7.
What is Capital Fund? How is it calculated?
Answer:
It is the Capital of the non-profit organisation. It is the excess of assets over liabilities of the organisation. It may be made up in part by capitalising entrance fees, or by capitalising life membership fees etc. Excess of income over expenditure or surplus is added to the capital fund and excess of expenditure over income or deficit is deducted from etc. Excess of income over expenditure or surplus is added to the capital fund and excess of expenditure over income or deficit is deducted from the Capital Fund. It is also called ‘Accumulated Fund’ or ‘General Fund .

Long Answer Type Questions

Question 1.
Explain the statement – “Receipt and Payment Account is a summarised version of Cash Book”.
Answer:
According to William Pickles “Receipt and Payment Account is nothing more than a summary of the Cash Book (Cash and Bank transactions) over a certain period, analysed and classified under suitable heading. It is the form of account most commonly adopted by the treasurers of societies, clubs, associations etc.

when preparing the results of the year’s working”. The main difference between the Cash Book and Receipts and Payments Account is that in a cash book all cash transactions are recorded date-wise in detail but in Receipts and Payments Account, from chronological record of cash transaction in the cash book, summary of cash transactions is prepared at the end of the period under consideration.

It does not give the date of the transactions. Thus, both ‘Cash Book’ and ‘Receipt and Payment Account’ provide the same information but in a different manner. For example, salary, rent, electricity charges paid from time to time as recorded on the credit side of the Cash Book but the total salary paid, total rent paid, total electricity charges paid during the year appear on the payment side of Receipts and Payments Account.

Thus, Receipt and Payment Account gives summarised picture of various receipts and payments, irrespective of whether they pertain to the current period, previous period or succeeding period or whether they are of capital or revenue nature. Let us take an example to show how cash book is summarised to show transactions in Receipts and Payments Account.

From the above aggregation of various receipts and payments, we can now prepare the summary of Cash Book and then represent this summary of Cash Book in the Receipts and Payments Account.

Therefore, it is clear from the above example that “Receipt and Payment Account is a summarised version of Cash Book”.

Question 2.
“Income and Expenditure Account of a ‘Not-For-Profit’ Organisation is akin to Profit and Loss Account of a business concern.” Explain the statement.
Answer:
“Income and Expenditure Account of a Not-For-Profit’ Organisation is akin to Profit and Loss Account of a business concern.” This statement is perfectly true because the set of rules or principles followed for preparing ‘Profit and Loss Account’ of a business concern and ‘Income and Expenditure Account’ of Not-For-Profit Organisation are same. As a result, there is no need for a separate conceptual framework for the preparation of both the accounts. As we know that business organisation prepare Profit and Loss Account to know the results of working of the business i.e. to know the Net Profit earned or Net Loss incurred during particular period.

‘Not-For-Profit’ Organisation do not prepare Profit and Loss Account because their primary objective is not to earn profit but to serve its members or society in general. However, these organisations compare incomes and expenses to check whether the organisation have sufficient resources to carry out its objectives. To achieve this, ‘Income and Expenditure Account’ is prepared by ‘Not-For-Profit’ Organisation.

Therefore, we can say that ‘Income and Expenditure’Account of Not-For-Profit Organisation is like ‘Profit and Loss Account’ of business concerns or profit-making organisations. ‘Not-For-Profit’ Organisation follow the same rule or principles for preparing Income and Expenditure Account which are followed by business organisations for preparing ‘Profit and Loss Account’.

Above statement can became more clear from the following points —
(i) ‘Income and Expenditure Account’ of ‘Not-For-Profit’ Organisation and ‘Profit and Loss Account’ of business organisation or trading organisation, both accounts are nominal accounts. Hence follow the same principle “Debit all expenses and losses and Credit all income and gains”.

(ii) Both accounts records all expenses and losses on the Debit side and all income and gains on the Credit side.

(iii) Both accounts records only revenue items and ignores capital items.

(iv) Both accounts are prepared on accrual basis i.e. both accounts records all the revenue items relating to the current period.

(v) Both accounts have not any opening and closing balances.

(vi) Both accounts prepared at the end of period after considering, all adjustments relating to current period.

(vii) Both accounts excludes all the items of income and expenses which do not pertain to the current period.

(viii) Both accounts shows the net result of working of the organisations during the current period in the form of profit or loss (for Business Organisation) and surplus/deficit (for ‘Not-For-Profit’ Organisation).
Hence, it is clear from the above discussion that “Income and Expenditure Account of a ‘Not-Fot-Profit’ Organisation is akin to Profit and Loss Account of a business concern”.

Question 3.
Distinguish between Receipts and Payment Account and Income and Expenditure Account.
Answer:
Distinction between Income and Expenditure Account and Receipt

Question 4.
Explain the basic features of Income and Expenditure Account and of Receipt and Payment Account.
Answer:
Basic Features of Income and Expenditure Account –
1. Nominal Account – It is a nominal account, therefore the rule of nominal account i.e. “Debit all expenses and losses and Credit all incomes and gains” is followed.

2. Ignore Items of Capital Nature – In this account only items of revenue nature are to be considered and all the items of capital nature should be ignored.

3. Prepare from Receipt and Payment Account – It is generally prepared from a given Receipts and Payments Account and other information after making necessary adjustments.

4. No Opening and Closing Balances – In this account no opening and closing balances of cash and bank are recorded.

5. Same as Profit & Loss Account – This account is prepared in the same manner in which a Profit & Loss Account is prepared, considering, all adjustment relating to current year.

6. Exclude Past and Future Items – It exclude all the items of income and expenditure which do not pertain to the current period.

7. End-balance of this Account – The end balance of the Income and Expenditure Account, which may be either ‘excess of income over expenditures’ or ‘excess of expenditure over income’ would be added to or deducted from, as the case may be, the capital fund, on the liabilities side of the Balance Sheet.

Basic Features of Receipt and Payment Account –
1. Real Account – It is a real account, so the rule of real account i.e. ‘Debit what comes in and Credit what goes out’ is followed. Thus receipts are recorded in Debit side and the payments are recorded in Credit side.

2. Summary of the Cash Book – It is a summary of the cash book. Its form is similar to cash book (without discount and bank column) with debit and credit sides.

3. Shows amount irrespective of period – It shows the total amount of all receipts and payments irrespective of the period to which they pertain,

4. No distinction between the nature (Capital or Revenue nature) – It includes ail receipts and payments whether they are of capita! nature or of revenue nature.

5. No distinction between mode of transaction (Cash or Bank) – No distinction is made in receipts/payments made in cash or through bank. With the exception of the opening and closing balances, the total amount of each receipts and payment is show’n in this account.

6. Do not show non-cash items – Non-cash items like depreciation, outstanding expenses, accrued income etc. are not shown it. this account.

7. Opening and closing balances – The opening and closing balance in it respectively mean cash in hand or cash at bank in the beginning and at the end. The balance of receipts and payment account must be debit being cash in hand or cash at bank, unless there is a bank overdraft.

8. Does not reflect net income or net loss – This account does not tell us whether the current incomes exceeds the current expenditure or vice versa or in other words it does not give any information of net income or net loss.

Question 5.
Show the treatment of the following items by a Not-For- Profit Organisation :
(i) Annual Subscription
(ii) Specific Donation
(iii) Sale of Fixed Assets
(iv) Sale of Old Periodicals
(v) Sale of Sports Materials
(vi) Life Membership Fee.
Answer:
(i) Annual Subscription – It is the amount paid by the members of the organisation periodically so that their membership is not cancelled. This is the main source of income of Not-For-Profit Organisations.

Treatment-

(i) The total amount of subscription received during the accounting period is shown in the receipt side (Dr. side) of Receipt and Payment Account.

(ii) Subscription related to the current period shown in the income side (Cr. side) of Income and Expenditure Account. Amount of subscription to be shown in Income and X Expenditure Account is calculated as follows :

(iii) Subscription outstanding at the end of year is shown on the assets side of Balance Sheet and subscription received in advance in current year for the next year is shown m the liabilities side of the Balance Sheet.
Example :
Subscription received during the current year — 50,000
Subscription outstanding at the end of year — 8,000
Subscription outstanding in the beginning of year — 6,000
Subscription received in advance during the year — 5,000
Subscription received in advance in last year — 4,000

Assets side of Balance Sheet:
Subscription outstanding at the end of year = Rs. 8,000 Liabilities side of Balance Sheet:
Subscription received in advance in current year = Rs. 5,000

(ii) Specific Donation – Donation is a type of gift in cash or in property received from person, firm or company. If the amount received as donation is for a specific purpose such as donations for extension of the existing building, donation for library, for construction of new computer laboratory etc., it is capitalised and is shown in the liabilities side of the Balance Sheet.

(iii) Sale of Fixed Assets – Receipt from the sale proceeds of fixed assets appear in the receipt side of Receipt and Payment Account. Only the profit or loss on the sale of a fixed asset is credited or debited, as the case may be, to the Income and Expenditure Account. In the Balance Sheet, the book value of the asset sold should be deducted from the relevant assets.

For example, if an item furniture with a book value of Rs. 5,000 is sold for Rs. 3,700, then amount of Rs. 3,700 will be shown in receipt side of Receipt and Payment Account and the loss of Rs. 1,300(5,000- 3,700) on sale of furniture will appear on the expenditure side of Income and Expenditure Account as a loss on sale of old asset and while showing furniture in the Balance Sheet Rs. 5,000 will be deducted from its total book value.

(iv) Sale of Old Periodicals – Receipts from the sale of old periodicals shown in the receipt side of Receipt and Payment Account. It is an item of recurring nature and shown in the income side of Income and Expenditure Account.

(v) Sale of Sports Materials – Sale of sports materials like old bat, old nets etc. is the regular feature with any sports club. It is treated as revenue income on the assumption that their book value is zero. It is therefore shown in the income side of Income and Expenditure Account. It also shown on the receipt side of Receipt and Payment Account.

(vi) Life Membership Fee – In order to become the member of an organisation for the whole of the life, some members pay the fee in lump sum i.e. once in their lifetime. It is a receipt of non-recurring nature since the members will not be required to pay the fees regularly. It is shown on the receipt side of Receipt and Payment Account and added to the capital fund in the Balance Sheet. It should not credited to the Income and Expenditure Account.

Question 6.
Show the treatment of items of Income and Expenditure Account when their is a specific fund for those items?
Answer:
‘Not-For-Profit’ Organisation creates some specific funds for a specific purpose such as ‘Prize Funds’, ‘Match Funds’ and ‘Sports Fund’ etc. It may be created by setting aside a part of the excess of income over expenditure or when amount is received for a specific purpose. The amount may be invested outside the organisation in securities fora particular period. This fund is shown on the liabilities side of the Balance Sheet and investment out of special fund is shown on the assets side of the Balance Sheet. Any receipt relating to that fund is added to the specific fund and expenses incurred relating to the fund are deducted from it These funds do not affect the Income and Expenditure Account.

Donations received for Sports Fund during the year — 40,000
Interest received on Sports Fund Investment — 9,000
Sports Prizes awarded — 20,000
Expenses on Sports Events — 30,000
Sports Fund in beginning of year — 1,00,000
Sports Fund Investment in beginning of year –1,00,000

Treatment:

Question 7.
What is Receipt and Payment Account? How is it different from Income and Expenditure Account?
Answer:
Receipt and Payment Account – A Receipt and Payment Account is a summary of cash transactions. It is prepared at the end of the accounting period from the cash receipts journals and cash payment journals.

“Receipt and Payment is nothing more than a summary of the cash book (Cash and Bank transactions) over a certain period, analysed and classified under suitable heading. It is the form of account most commonly adopted by the treasures of societies, clubs, associations etc. when preparing the results of the year’s working.” – William Pickles In other words, Receipts and Payment Account, simply is a summary of cash and bank transactions under various heads.

On the debit side, it begins with an opening balance of cash and bank and records all the items of receipts irrespective of whether they are of capital or revenue nature or whether they pertain to the current or past or future accounting period(s). The payments are recorded on the credit side without making any distinction between items of revenue and capital nature and whether they belong to the current or past or future accounting period(s).

It may be noted that this account does not show any non-cash item like depreciation. At the end of period, this account is balanced to ascertain the balance of cash in hand or cash at bank. The annual totals of various items of receipts and payments are found from their respective accounts in the ledger or from the cash book and are then entered in the Receipts and Payment Account.

Income and Expenditure Account – It is a nominal account of ‘Not-For-Profit’ Organisation equivalent to the Profit and Loss A/c of the trading concerns. The term profit is substitute by the words excess of income over expenditure (surplus) and the loss is expressed as excess of expenditure over income (deficit). It reveals the surplus or deficit arising out of the organisation’s activities during a accounting period. This account is prepared on accrual basis and includes only items of revenue nature.

All the revenue items relating to the current period are shown in this account. The expenses and losses on the expenditure side (debit side) and income and gains on the income side (credit side) of the account.It shows the net operating result in the form of surplus or deficit, which is transferred to the Capital Fund shown in the balance sheet.

The distinction between Income and Expenditure Account and Receipt and Payment Account

Numerical Questions

Question 1.
From the following particulars taken from the Cash Book of a health club, prepare a Receipts and Payments Account.

Answer:

Question 2.
The Receipt and Payment Account of Harimohan Charitable Institution is given :

Prepare the Income and Expenditure Account for the year ended on March 31, 2007 after considering the following :
(i) It was decided to treat fifty percent of the amount received on account of Legacies and Donations as income.
(ii) Liabilities to be provided for are: Rent Rs. 800; Salaries Rs. 1,200; Advertisement Rs. 200.
(iii) Rs. 2,000 due for interest on investment was not actually received.
Answer:

Question 3.
From the following particulars, prepare Income and Expenditure Account:


Answer:

Question 4.
Following is the information given in respect of certain items of a Sports Club. Show these items in the Income and Expenditure Account and the Balance Sheet of the Club :

Question 5.
Give reasons for your answers.
Answer:
(a) Donation received Rs. 12,25,000 for the construction of a permanent Pavilion is a specific donation. Therefore, it will be capitalised and shown on the liability side of Balance Sheet at the end. Amount spent on the construction of Pavilion till the end of year Rs. 10,80,000 will be deducted from the Donation received. Estimated cost of construction will not be shown in Income and Expenditure Account and in Balance Sheet of the club. It should be noted that after the completion of the purpose of a specific fund, the balance lying in that fund is transferred to the Capital Fund.

(b) Tournament Fund is a special fund. Therefore, it is shown on the liability side of the Balance Sheet. Any receipt relating to the fund (subscription for tournament) is added to the fund and expenses (Expenditure incurred on conducting tournaments) are deducted from the fund.

(c) Unless otherwise stated in the question, whole of the Life Membership Fee is capitalised. Therefore Rs. 28,000 received as Life Membership Fee will be shown on the liability side of the Balance Sheet at the end.

Question 6.
From the following receipts and payments and information given below, prepare Income and Expenditure Account and opening Balance Sheet of Adult Literacy Organisation as on December 31,2006 :


Information :
(i) Subscription outstanding as on 31.12.2005, Rs. 2000 and on December 31, 2006, Rs. 1,500.
(ii) On December 31,2006 Salary outstanding Rs. 600, and one month Rent paid in advance.
(iii) On January 1, 2005 organisation owned Furniture Rs. 12,000, Books Rs. 5,000.
Answer:

Question 7.
The following is the account of cash transactions of the Nari Kalyan Samittee for the year ended Dec ember 31,2006.

You are required to prepare an Income and Expenditure Account after the following adjustments :
(a) Subscription still to be received are Rs. 750, but subscription include Rs. 500 for the year 2007.
(b) In the beginning of the year the Sangh owned building Rs. 20,000 and furniture Rs. 3,000 and Books Rs. 2,000.
(c) Provide depreciation on furniture @ 5% (including purchase), books @ 10% and building @ 5%
Answer:

Question 8.
Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account, Balance Sheet as on December 31, 2006 :

Other Information :
Subscription outstanding was on December 31,2005 Rs. 1,200 and Rs. 3,200 on December 31, 2006. Locker rent outstanding on December 31, 2006 Rs. 250. Salary outstanding on December 31, 2006 Rs. 1,000.
On January 1, 2006, club has building Rs. 36,000, furniture Rs. 12,000. Sports equipments Rs. 17,500. Depreciation charged on these items @ 10% (including purchase).
Answer:

Question 9.
From the following Receipt and Payment Account of Jan Kalyan Club, prepare Income and Expenditure Account and Balance Sheet for the year ending December 31, 2006 :
Answer:

Question 10.
Receipt and Payment Account of Shankar Sports Club is given below, for the year ended December 31,2006 :


Prepare Income and Expenditure Account and Balance Sheet with help of following information :
Subscription outstanding on 31st December, 2005 is Rs. 1,200 and Rs. 2,300 on 31.12.2006, opening stock of postage stamps is Rs. 300 and closing stock is Rs. 200, Rent Rs. 1,500 related to 2005 and Rs. 1,500 is still unpaid.
On January 1, 2006 the club owned furniture Rs. 15,000, Furniture valued at Rs. 22,500 on 31.12.2006. The club tooka loan of Rs. 20,000 (@ 10% p.a.) in 2005.
Answer:

Question 11.
Prepare Income and Expenditure Account and Balance Sheet for the year ended December 31, 2006 from the following Receipt and Payment Account and Balance Sheet of Culture Club :

Answer:

Question 12.
From the following Receipt and Payment Account prepare final accounts of a Unity Club for the year ended March 31, 2007 :


Additional Information :
(1) The club had 500 members each paying an annual subscription of Rs. 150.
(2) On 31.3.2007 salaries outstanding amounting to Rs. 1,200 and salaries paid included Rs. 6,000 for the year 2005-06.
(3) Provide 5% depreciation on Land and Building.
Answer:

Question 13.
Following is the information in respect of certain items of a Sports Club. You are required to show them in the Income and Expenditure Account and the Balance Sheet.

Answer:

(These items does not affect the Income and Expenditure Account.)

Question 14.
Receipt and Payment Account of Maitrey Sports Club showed that Rs. 68,500 were received by way of subscription for the year ended on March 31,2006.
The additional information was as under :
(1) Subscription outstanding as on March 31, 2005 were Rs. 6,500.
(2) Subscription received in advance as on March 31,2005 were Rs. 4,100.
(3) Subscription outstanding as on March 31, 2006 were Rs. 5,400.
(4) Subscription received in advance as on March 31,2006 were Rs. 2,500.
Show how that above information would appear in the final accounts for the year ended on March 31,2006 of Maitrey Sports Club.
Answer:

Subscription credited to Income and Expenditure Account for the year ended on March 31,2006 is Rs. 69,000. Subscription outstanding as on 31.3.2006 is Rs. 5,400 and should be shown on the assets side of the Balance Sheet as on March 31,2006 and subscriptions of Rs. 2,500 received in advance as on March 31,2006 on the liabilities side of the balance sheet as on March 31, 2006.

Question 15.
Following is the Receipt and Payment Account of Rohatgi Trust:

Prepare Income and Expenditure Account for the year ended December 31, 2006 and a Balance Sheet as on that date after the following adjustments :

Subscription for 2606, still owing were Rs. 7,000. Interest due on defence bonds was Rs. 7,000, Rent still owing was Rs. 1,000. The book value of investment sold was Rs. 80,000, Rs. 30,000 of the investment were still in hand. Subscription received in 2006 included Rs. 400 from a life member. The total furniture on January 1, 2006 was worth Rs. 12,000. Salary paid for the year 2007 is Rs. 2,000.
Solution :

Question 16.
Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31,2007:

Prepare Income and Expenditure Account for the year ended December 31,2006, and a Balance Sheet as on that date after the following adjustments :
(a) It was decided to treat one-third of the amount received on account of donation as income.
(b) Insurance premium was paid in advance for three months.
(c) Interest on investment Rs. 1,100 accrued was pot received.
(d) Rent Rs. 600; salary Rs. 900 and advertisement expenses Rs. 1,000 outstanding as on December 31,2007.
Solution:

Question 17.
From the following Receipt and Payment Account of a club, prepare Income and Expenditure Account for the year ended December 31,2006 and the Balance Sheet as on that date : Receipt and Payment Account for the year ending December 31,2006

Additional Information :
(a) The club has 100 members each paying an annual subscription of Rs. 900. Subscriptions outstanding on December 31,2005 were Rs. 3,600.
(b) On December 31,2006, the salary outstanding amounted to Rs. 1,000. Salary paid included Rs. 1,000 for the year 2005
(c) On January 1, 2006 the club owned land and building Rs. 25,000, furniture Rs. 2,600 and books Rs. 6,200.
Solution:

Question 18.
Following is the Receipt and Payment Account of Women’s Welfare Club for the year ended December 31, 2007 :

Prepare Income and Expenditure Account for the year ended December 31,2007 and Balance Sheet as on that date.
Answer:

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy Chapter 15 Accounting System Using Database Management System Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Accounting System Using Database Management System NCERT Solutions for Class 11 Accountancy Chapter 15

Accounting System Using Database Management System Questions and Answers Class 11 Accountancy Chapter 15

Test Your Understanding Fill in the blanks :
(a) Reports, the need for which is not anticipated is called …………………. reports.
(b) ………………… query does not involve use of any query function to produce a summary of data.
(c) ………………… query prompts the user to enter criteria for selecting a set of records.
(d) ………………… clause is used to specify the fields to display data or information.
(e) ………………… is meant to include page number, data and time of report.
(f) The purpose of is to organise the information of ………………… report into categories whereas arranges
information into numerical or alphabetical order.
(g) When saved as ………………… the contents of reports cannot be modified by the user.
Answer:
(a) Casual
(b) Simple
(c) Parameter
(d) SELECT
(e) Design view
(f) Sorting, sorting order
(g) Snapshot

Short Answer Type Questions

Question 1.
State what do you understand by accounting reports?
Answer:
A report displays information that is acquired from data processing and transformation in an organised manner. Reports tend to reduce the level of uncertainly associated with decision-maker and also influence their positive actions. The output of the computerised accounting system are accounting reports. An accounting system without reporting capability is incomplete as reporting is one of the main purpose for which an accounting system is designed and operated upon.

Data from various sources is collected and manipulated in such a way as to provide certain information. Then the related information is comprised to render certain use and such summarised information is called a report. The level and extent of the report varies according to the level it is submitted and the type of decisions to be based on it. In order to be effective a report must be accurate, timely and relevant.

In fact a report must have the following characteristics :
(a) Relevance
(b) Accuracy
(c) Timeliness
(d) Conciseness
(e) Completeness

A report is always prepared with a definite objective. Reporting has two objectives :
(1) To reduce the level of uncertainty that is faced by a decision-maker.
(2) To influence the behaviour of decision-maker.

Accounting report is the physical form of accounting information.
Reports, which do not meet the above states objectives, lack or do not have sufficient information context, have no value.
There are two types of accounting report:
(1) Program med Reports
(2) Casual Reports

(1) Programmed Reports : It contain informations useful for decision-making situations that the user have anticipated to occur. Programmed Reports are of two types :
(a) Scheduled Reports
(b) On Demand Reports

(a) Scheduled Reports – Reports which one produce according to a given time-frame, are called scheduled report. The time – frame may be daily, weekly, monthly, quarterly or yearly. Trial Balance, Ledger, Statement of Cash Transactions, Bank Book, Inventory Report, Profit & Loss Account and Balance Sheet, etc. are the examples of scheduled reports.

(b) On Demand Reports – Reports which are produced only on the triggering of some event, are called On Demand Reports. Customer’s Statement of Account, Inventory Records Report, etc. are the examples of on demand reports.

(2) Casual Reports : There are reports, the need for which is not anticipated, the information context of which may be useful but casually required. These are ad hoc reports and are generated casually by executingsome simple queries without requiring much of professional assistance. As opposed to programmed reports, casual reports are generated as and when required.

Question 2.
What do you mean by programmed or casual reports?
Answer:
An accounting system without reporting capability is incomplete as reporting is one of the main purposes for which an accounting system is designed and operated. The output of accounting system takes the form of accounting reports. A report is prepared with a definite objective. Every report is collection of related information for a particular need and purpose.

Accounting information generated by processing accounting data is gathered to generate an accounting report. An accounting report, in order to be useful, must display information context in such a manner as to give confidence to the user, influence his behaviour and prompt him to take positive action.

There are two types of accounting reports :
(1) Programmed Reports
(2) Casual Reports

(1) Programmed Reports: These reports contain information useful for decision-making situations that the users have anticipated to occur. There are two types of Programmed Reports :
(a) Scheduled Reports
(b) On Demand Reports
(a) Scheduled Reports – Reports which are produced according toa given time-frame, are called scheduled reports. The time¬frame may be daily, weekly,’monthly, quarterly or yearly. Cash Book, Bank Book, Inventory Report, Trial Balance, Profit & Loss A/c, Balance Sheet, etc. are the examples of scheduled reports.

(b) On Demand Reports- The reports, which are produced only on the triggering of some event, are called On Demand Reports. Inventory Re-order Statement, Creditor Statement, etc. are the examples of on demand reports.

(2) Casual Reports : These reports are casually required. There are reports, the need for wh ich is not anticipated, the information context of which may be Useful but casually required. These mzadhoc reports and are generated casually by executing some simple queries without requiring much of professional assistance. As opposed to programmed reports, casual reports are generated as and when required.

Question 3.
With the help of an example, briefly state the meaning of parameter queries.
Answer:
One of the most useful features of the modem database applications is the queuy, which provides us a way to question our database. The result of a query can then be printed or viewed on screen.

A query is a statement that communicates to Access the kind of information we need to entract from one or more table. Queries can be used as a source of information for forms and reports. Access executes the query each time we open the form or the report.

Parameter Queries is one of important type ofquerythat is required for generating reports.

Parameter Queries – A parameter query prompts the user to enter parameters, or criteria through an input box, For selecting a set of records. It is useful when there is a need to report the same query with different criteria. The criteria, this means, is not constant as in the case of the simple query. While entracting the transactions to prepare ledger accounts, the same set of queries need to he executed for different account code.

Taking example of following SQL Statement:
PARAMETERS Account Name Text (255)
SELECT Name
FROM Accounts
WHERE Code = Account No.
Here, the PARAMETERS clause is meant to declare the variable Account No. This SQL statement, when executed, prompts the user to provide the value of Account No.

Question 4.
Briefly state the purpose of functions in SQL environment.
Answer:
A function in the SQL environment is named and followed by parenthesis (). The function receives some inputs as its arguments and returns a value. These functions also form a part of the expression for a command field. The purpose of functions in SQL environment is to set the Control Source property of calculated controls and for to
form part of calculated field express in SQL statement.
There are three types of functions that are used in SQL statements
(1) Domain Aggregate Functions
(2) SQL Aggregate Functions
(3) Other Functions

(1) Domain Aggregate Functions – These functions are used to perform calculation based on values in a field of a table or query. All the domain aggregate functions use^he same syntax. DFunction (“Fid Name ‘, “Tbl Name” or “Qry Name”, “Srch Cond”)
Where
DFunction = Domain Aggregate Function Name Fid Name = Name of the field to searched Tbl Name = Name of table which contain the above field Qry Name = Name of query which contain the above field 1 Srch Cond = Search Condition on the basis of which the relevant record is searched.

(2) SQL Aggregate Functions – These functions are used in SQL Statements that provide the underlying record source of forms and reports. All these functions, when used require the GROUP BY clause in SQL Statement.

(3) Other functions –
(a) I IF: The purpose of this function is to Provide a value to the field from a mutually exclusive set of values.
(b) Abs: The purpose of this function is to return absolute value. This function receives a numeric value as its input argument and returns an absolute value.
(c) Val : The purpose of this function is to return the number contained in a string as a’ numeric value of appropriate type.

Question 5.
Briefly explains in steps the method of creating a query, using Wizard.
Answer:
Creating Query by using Wizard – The following steps are required in order to create a query using Wizard :
(i) Select queries from objects list given in left hand side of Database Window.

(ii) Double click at Create Query by using Wizard given on the RHS. Immediately, there is a window titled ‘Simple Query Wizard’ that prompts the user to select a field from a table or an existing query that is to be included in the query being created. Many such fields may be selected according to the information – requirement of the query. The table being chosen represent the data source of the query being created. The field being selected imply the data items to be displayed by the query. Use arrow buttons or double click at the list of fields on LHS of this window to select fields.

(iii) Click at Next after the desired fields have been selected. If the selected fields include number or query field, the designer is prompted to choose an option button to specify where the query to be created in a summary or in detail.

• If detail option is chosen, the execution of query results in displaying records from data source.
• if summary option is selected, the user is prompted to indicate the type of summarisation required –
  Sum, Average, Minimum and Maximum with respect to the field of summarisation. Clicking at check boxes against different types of summarisation specifies this click OK.

(iv) Click at Next and specify the name of query being created % finish to save and execute the query. The result of the query are displayed in datasheet view.
Or
Create Query by using Wizard
(i) Start Access and open the database.

(ii) In the Database window Double Click on the Create Query by using Wizard.
The Simple Query Window will appear on the screen.
(iii) Select the table in the Table/Queries list box. Select the fields from the list displayed in Selected fields as shown in above figure.
(iv) Click the Next button. The Simple Query Wizard appears on the screen.

(v) Click the Detail or Summary button. click Next select Query window appears.

(vi ) Click at Next and specify the name of the query being created % Finish to save and execute the query.

Question 6.
List the structure of a good report created in access.
Answer:
Structure of a good report in access – The structure of a good report created in access contain seven sections. It is not necessary that every report created in access contain all the sections.
The seven sections of structure of reports are following :
(1) Report Header
(2) Page Header
(3) Group Header
(4) Details
(5) Group Footer
(6) Page Footer
(7) Report Footer

Report Header : It appears at the top of the report and includes title and other relevant information about the report.

Page Header : Page Header appears at the top of every page of the report. It may include a uniform title to indicate that page belongs to particular report.

Group Header: The Group Header and Footer are available in a report only if the sort order and grouping levels are also defined on the basis of a field of data source. This is because it is the properties of this field that are used for defining the sort order. Depending on grouping level, the group header appears at the top of each report group. A set of report pages constitutes a report group. Each group level of report contains a separate group header.

Details : It is also called the main body of a report. It contains data from tables or queries that provide the record source to a report. It consists of the main information context of a report so this section is the most important.

Group Footer : The Group Footer appears at the bottom of each grouping level and may contain summaries or sub-totals for the grouped data.

Page Footer : Page Footer appears at the bottom of each page of the report and is meant to include page numbers, date and time of report generation.

Report Footer : Report Footer appears once on the last page of the report to include summaries or totals for all data of this report.

Question 7.
List the ways to refine the design of a report.
Answer:
The design of the report can be created by any of the following methods :

• Auto Report
• By using Wizard
• By Design view

It may be improved or refined by making the following additions and modification to the report. For this purpose, an existing report is opening in Design mode.
(1) Adding Dates and Page Numbers
(2) Adding and Deleting Report Controls
(3) Conditionally Formatting Report Controls
(4) Grouping Levels and Sorting Order.

Adding Dates and Page Numbers: When report opened in design mode, the page footer contain the current date and current page number of total number of pages.
The date control use = Now ( ) function to retrieve the current date from RTC of computer. Format property of this control can modify the format of date by selecting General Date, Medium Date, Short Date or Long Date.
If a report is created using design view method, the date and/or time and page number may be added to any of its part.

The page number is added by clicking Insert % Page numbers from the menu bar to open the Page number dialog box, which allow the user to specify the format, position and alignment. The two formats are following:
(1) Page N (example Page 1)
(2) Page N of M (example Page 1 of 10)

The position to specify is either top of page or Bottom of page. Possible alignment are at centre, left, right, inside and outside.

‘Adding and deleting Report Controls : After the designing report, additional report controls may be added or deleted. Clicking tool bar icon opens report design tool bar, which contains a set of useful controls.
(i) Open report in design mode.
(ii) Click Field List button on report design tool bar.
(iii) Drag the field into an appropriate section of the report. The field appears with both label and text box control.
(iv) A field control may be deleted by selecting the control and Dressing the Delete key.

Conditionally Formatting Report Controls : The Conditional Formatting allows the designer to apply special text format that depends on the value of field. This facility is a useful tool to draw the attention of user or reader of report to some values of particular interest, such as amount exceeding certain limit or unexpected balances in some accounts.

Following steps are required to create a conditional formatting :
(i) Open report in design mode.
(ii) Select a control and click at Format on menu bar.
(iii) Click at Conditional Formatting.
(iv) Provide necessary conditions.
(v) The conditional formatting is deleted by re-opening the same dialog box and clicking at Delete button.

Grouping Levels and Sorting Order :
Grouping Level – The purpose of grouping is to organise the information content of a report into categories.
Sorting Order – It is meant to arrange such information content into numerical or alphabetical order.
When grouping and sorting of information, applied together, makes the report more meaningful and therefore useful to the user of the report.

The following steps are taken to specify the grouping and sorting order :

(i) Click at Sorting and Grouping icon of Report Design Tool bar. Access displays the following sorting and grouping dialog box.

(ii) Type field of accounts has been chosen on the basis of grouping the information content of trial balance. The group header and footer properly is set to yes to indicate that there is separate header and footer for each group of accounts in trial balance.

Question 8.
Briefly explain the purpose of grouping and sorting of the data as a means to define a report.
Answer:
The design of the report may be improved or refined by making the additions and modification to the report. This can be done by grouping and sorting of the data.

The purpose of grouping is to organise the information content of a report into categories. Sorting order is meant to arrange such information content into numerical or alphabetical order. With grouping the sorting applies to each individual group. The grouping and sorting of information, when applied together, makes report more meaningful and therefore useful to the user.

In order to specify the grouping and sorting order, following steps taken –
(1) Click at Sorting and Grouping icon of Report Design Tool bar. Access respond by displaying the following Sorting and Grouping dialog box :

(2) The LHS of this box provides a list of fields or expressions that are to be used for grouping and sorting. In the above dialog box, Type field Account has been chosen as the basis of grouping the information content of trial balance. The group header and footer properly is set to yes to indicate that there is separate header and footer for each group of accounts in trial balance.

Question 9.
What do you understand by saving a report as snapshot?
Answer:
After the creation of report, it may be saved in such a manner so as to be viewed by other without the help of Access. It is possible by saving the report as a snapshot file. As a result with help of Adobe.

Acrobat software, high quality picture image of each page of report is created. Other users of the report can then view the report and print any of its pages without being able to modify its contents. In order to create a report snapshot, following steps are required –

(1) Select and generate a report in Database Window.
(2) Click File % Export from menu bar. An Export Report dialog box appears.
(3) Choose the folder from combo box next to Save in, provide a file name; select snapshot from list control next to Save as type and click at Save button. While saving the report ensure that the auto start check box is enabled.
The generated report is saved as a snapshot and can be supplied to others for printing and viewing without the help of Access database.

Question 10.
State the procedure for creating ledger in MS Access.
Answer:
Financial Accounting Reports such as Cash Book, Bank Book, Ledger Account, Trial Balance etc. may be generated in Access by adhering to report generation process.

The ledger is one of accounting report, which show the transaction ( of a particular account, during a given period of time. The format of typical ledger is as given :

data records each of which provide information Code (Account Number), Name of Account, Particulars, Date, Debit Balance and Credit Balance with reference to each particular amount.

To get all the above information we have to make certain SQL statements and save them as query. Lets save the last query as Query L.

Now in access we can create the Ledger Account by taking following steps :
The Ledger is generated using the Design view method.
1. Select Reports from the object list in Database window.
2. Click at New button. This displays the New Report Window.
3. Select Design view and Query L from combo control.
4. Click OK.

Access responds by displaying a blank report design divided horizontally into three sections – Page Header, Detail and Page Footer. Besides, a list of available fields of Query L is also provided for embedding on to this blank design of report.

5. Click at properties of report and select data tab to define the record source as Query L. This gives a list of available fields of Query L.

6. Right click at any part of report design and choose report Page Header and Footer. Access responds by providing two more sections – Page Header and Page Footer.

7. Click at the icon of toolbar and pick up a label control to be placed at Page Header Section and assign set its caption properly to (account name), Font Size to 16, Font colour to Blue, Text align to Left and Font weight to Bold.

8. Select all the fields of Query L by clicking at every field while keeping the Ctrl key pressed. Drag and drop the selected field on Details section.

9. Select the lable control of all the six fields by clicking at each while keeping the shift key pressed. Right click at select label control and choose Cut. Place the mouse at Page Header Section and Paste these control.

10. Choose the properties provided by Access.

11. Align the text controls in Detail section.

12. Select the text controls and amount field and modify their properties.

This way we can create the ledger in Access.

Long Answer Type Questions

Question 1.
Describe and discuss the procedure of creating the receipts side of a cash book.
Answer:
Cash book is a type of accounting report. The procedure of creating the receipts side of cash book is as same as report generation. To produce receipts side of a cash book, it is necessary to retrieve a set of processed data records which provide information on code (Account Number), Name of account, Particular and Credit Balance with reference of each account where cash account is debited. We have to find out the amount and particulars of the transaction in which cash is received i.e. cash account is debited. Firstly, to find out these amounts and particular we have to make a set of SQL statements and save them into Database after giving particular name to each query.

After this we have to start the MS Access database-
Select there create report in design view and Query (last saved). This respond to give blank report design divided into three sections – Page Header, Detail and Page Footer and of available fields of Query. Here, we design our report with the tools provided by Access like giving name to the report, defining its size and colour. After this we select all the fields from our Query and drag and drop them into the Details section. By applying some arithmetical calculations provided by Access we get the receipt side of cash book.

Question 2.
Discuss the concept of accounting reports. Explain the three steps involved in creating such reports.
Answer:
A report displays information that is acquired from data processing and transformation in an organised manner. Reports tend to reduce the level of uncertainly, associated with decision-maker and also influence their positive action. The output of the Computerised Accounting System are accounting reports. An accounting system with-out reporting capability is incomplete as reporting is one of the main purpose for which an accounting system is designed and operated upon. Cash Book, Bank Book, Ledger, Trial Balance, Profit & Loss Account and Balance Sheet are the examples of accounting reports.

Data from various sources is collected and manipulated in such a way as to provide certain information. Then the related information is comprised to render certain use, and such summarised information is called accounting report. The level and extent of the report varies according to the level it’s submitted and the type of decision to be based on it. In order to be effective a report must be accurate, timely and relevant.

An accounting report is always prepared with a definite objectives. Every report is a collection of related information for a particular need and purpose. It must satisfy following two objectives –
(1) To reduce the level of uncertainty that is faced by a decision-maker.
(2) To influence the behaviour of decision-maker. .

Accounting informtion generated by processing of accounting data
is gathered to generate the accounting report. An accounting report therefore, is the physical form of accounting information. Useful accounting reports must have five following characteristics –
(1) Relevance
(2) Timeliness
(3) Accuracy
(4) Completeness
(5) Summarisation

(1) Relevance: To be useful, report must be relevant to the decision making needs of the user. Report has the quality of relevance when it influences to economic decision of the user by helping them to evaluate past, present or future events or confirming or correcting their past evaluation. The productive and confirmatory role of report are inter-related.

(2) Timeliness : If there is undue delay in reporting, it may lose its relevance. To.provide report on a timely basis, it may often be necessary to report before all aspects of a transaction or other events are known. Conversely, reporting is delayed until all aspects are known, the report may be highly reliable but of little use to the user who have had to make decision in the interim period.

(3) Accuracy : Accounting report be accurate and present true and fix view of the financial position and performance of the enterprise.

(4) Completeness : To be reliable report in accounting must be complete within the bounds of materiality and cost. An omission can cause report to be false or misleading and thus unreliable and deficient in terms of decision-making.

(5) Summarisation: Report should be summarised in manner which makes it attractive and useful to users.
An accounting report, in order to be useful, must display information content in such a way to give confidence to the user, influence his behaviour and prompt him to take positive actions. Reports, which do not meet the above-stated objectives, lack or do not have sufficient information content, have no value.

Types of Accounting Report :
(1) Programmed Reports
(2) Casual Reports
(1) Programmed Reports : It contain information useful for decision-making situations that the user have anticipated to occur. Programmed Reports are of two types :
(a) Scheduled Reports
(b) On-demand Reports

(a) Scheduled Reports – Reports which are produced according to a given time frame, are called scheduled report. The time¬frame may be daily, weekly, monthly, quarterly or yearly. Trial Balance, Ledger, Statement of Cash, Bank Book, Inventory Report, Profit & Loss Account and Balance Sheet, etc. are the examples of scheduled reports.

(b) On-demand Reports – Reports which are produced only on the triggering of some events, are called On-demand Reports. Customer’s Statement of Accounts, Inventory Re-order Report, etc. are the examples of On-demand Reports.

(2) Casual Reports : There are reports, the need for which is not anticipated, the information content of which may be useful but casually required. These are ad hoc reports and are generated casually by executing some simple queries without requiring much of professional assistance. As opposed to programmed reports, casual reports are generated as and when required.

The process of creating accounting reports in Access involves following three steps:
(1) Designing the Report
(2) Identifying the Accounting Information Queries
(3) Creating an Accounting Report

(1) Designing the Report: Every report is expected to meet certain objectives of reporting for which it is designed and developed. It must has the five main characteristics of good report. It should not be too big so as not to be read at all or too small so as to missing some important information that is expected to facilitate the decision-making. Objective-oriented reporting means designing the report in such a manner as to meet the pre¬determined objectives in view.

(2) Identifying Accounting Information Queries : A number of SQL statements are written in such a way that each successive SQL statement relies upon the results of the preceding SQL statement and refines its results by using fresh data from existing data tables or queries.

(3) Using the Report Set of Final SQL Statements: The record set . of final SQL statement that relies upon the preceding SQL statement, is collection of report-oriented information. This record set need be embedded in the report being produced.

Question 3.
Discuss with a set of inter-related data tables, the basics of creating queries in MS Access?
Answer:
A query is a statement that gives filtered data aeeordingto one’s conditions and specifications. A query may be created to find and retrieve the exaet data that meets the specific conditions. A query can retrieve wanted data from multiple tables at one time.

A query can also update or delete multiple records at the same time and can perform predefined calculations on the given data. A query is a link between inter-related tables, forms etc.

Accounting information that is presented in an accounting report is generated by creating and executing various queries using DBMS. A query is a statement that communicates to Access the kind of information we need to extract from one or more inter-related tables. Queries can be used as a source of information for forms and reports.

The basics of creating queries in MS Access with a set of inter-related data tables are discussed below :
As we know that Relational Database Management System stores data in different table (Relations) so that there is no or minimum data redundancy. But for a complete view of data stored across various tables is achieved only by executing queries based on SQL. A query is capable of displaying records containing fields from across a number of data tables.

SQL has statement for data definition, query and update. Besides this, it has the capability to define user-oriented views of database, specify security and authorisation, define integrity constraints and various other operations. Various SQL statements are used to create queries for inter-related data tables. Consider this following statement:
SELECT Code, Name, Sum (Amount)
FROM Vouchers INNER JOIN Accounts
ON (Accounts, Code – Voucher. Debit)
GROUP BY Code, Name

In the above query, the vouchers table has been joined with Accounts table.on the basis of Code field of Accounts and Debit field of vouchers. The result record set has been grouped on the basis of Code and name of accounts. The sum of account for each group has been ascertained and displayed.

Consider another SQL statement
SELECT Debit As Code, Name, Category FROM Vouchers, Accounts, Account Type WHERE Debit – Code AND Type = Cat ID AND category = “Expenses”
In the above query, vouchers table, Accounts table and Account Type table are joined on the basis of Debit field, Code field and Cat ID field respectively to retrieve Code, Name and Category of Expense accounts which have been debited.

Question 4.
Briefly explain the set of SQL statements to produce the receipts side of a Cash Book for Model-I.
Answer:
The following series of SQL statement retrieve a record set of producing the
receipts side of cash book for Model – I:

(a) To find the total amount by which the Cash Account is debited.
In order to ascertain the total amount by which every transacted Cash Account has been debited, the
SELECT Clause need to have two fields – one.code to identify the account and another to generate the total by which such account has been debited.
SQL Statement:
SELECT Credit As Code, Amount, Date
FROM Vouchers
WHERE Debit Like “631 ”
This SQL statement gives the code and amount from which cash is received.
This SQL statement is saved as Query C2.

(b) To generate the total of Receipt side.
SQL Statement:
SELECT Code Sum (Amount) As Total
FROM Query Cl
GROUP BY Code .
This SQL statement is save as Query C2.

(c) To find the record set which consist of account code, name of account, credit amount and date.
SELECT a. code b. name As [Name of Account], IIF (a = Total > 0, a. Total, null As Amount)
FROM Query C2 As a Accounts As b WHERE a code = b code

Question 5.
Describe in steps the design view method to create a query in MS Access?
Answer:
The following steps are required to create a query in MS Access by using design view :
(1) Select Queries from object list of database window.
(2) Double Click at Create Query by Using Design view.,
This will display the Select Query and Show Table window. [Select Query Windows is divided into two panes :
(i) Upper pane
(ii) Lower pane

The upper pane is meant to display Table/Queries. The lower pane is also called Query By Example (QBE) grid, has one column each for field to be included in query being created. The row of this grid shows field name, table/query, sort order and also the criteria that have been applied to the field or fields to restrict the query results. The Show Table Window is meant to add tables, queries or both to the upper pane of Select Query Windows.

(3) Click at view of menu bar % Total and then % Table names.

(4) Click at field row of first column of QBE grid to select the fields to be included in the query.

(5) The name of table or query is displayed, according to selection of fields. Such tables/queries constitute the data source shown after FROM clause of SQL statement. However, the initial selection of a table/query in the second row of QBE grid restricts the choice of fields to the selected table/query only.

(6) Click at row of grid to specify the group by clause and aggregate functions so that summary a query is created.

(7) Click at row of grid to specify the sort order on fields.

(8) Click at row to check for the selected field to be displayed in the query results.
•  Click at row of the grid to-specify the criteria to limit the records to be displayed by the query being created.
• Click at File % Save to save a query. A dialog box appears to name the query created.
Or
(1) Click at Queries tab under objects in Database Window.
(2) Click at New. This will display New Query dialog box.
(3) Select the Design view and click at OK. This will display Show Table.
(4) Select desired table/query. Click at Add button.
(5) Click at dose button to close show table. This will display Query Design Window.
(6) In order to add a field to the design grid from table/query in the field list section of the Query Design Window. One has to double click on the field he wishes to add.
Repeat this until all the required fields are added to the query.
(7) Save the query window using command Save As on File Menu.
(8) To specify the sort criteria, click at sort row below the desired field in the design grid of Query’ Design Window and then click on the down arrow and select Ascending or Descending.
(9) Select row of the grid to specify the criteria to limit the records to be displayed by the query being created.

Question  6.
Discuss the SQL view method of creating a query?
Answer:
A query may be created directly in Select Query Pane by a right click at table pane % SQL view.
(1) Specify the SQL statement by typing at keyboard.
(2) Click at OK.
It directly save SQL Statement, the following clauses are normally used for generating informations queries –
(I) SELECT : It specify the fields to display data or information. SQL Statement – SELECT Code, Name, Amount.
Code, Name, Amount fields are display by the query statement.

(II) FROM : Tt specify the source of data for answering the query. SQL Statement –
SELECT Name FROM Employees
This shows the name of employees from the Employees table.

(III) JOIN-: It join the two tables based’ on condition of join. There are three types of join –
(a) INNER JOIN
(b) LEFT JOIN
(c) RIGHT JOIN
(a) INNER JOIN – It display only exactly matching records between data sources.

SQL Statement –
FROM Accounts INNER JOIN Accounts Type ON (Cat ID = Type)
It display only those records from Accounts and Accounts Type table which match exactly Cat ID = Type.

(b) LEFT JOIN : It displays, all the records to the primary table in the relationship irrespective whether there are matching records in the related table or not.
SQL Statement
FROM Accounts LEFT JOIN Account Type ON (Cat ID = Type)
It displays all records of Accounts along with matching records of Account Type table which match condition Cat ID = Type.

(c) RIGHT JOIN : It displays, al l the records of related table in the relationship irrespective whether there are matching records in the Primary table or not.
SQL Statement —
FROM Accounts RIGHT JOIN Account Type ON (Cat ID = Type)
It displays all records of Account Type table along with matching records of Accounts table.

(IV) WHERE: It is used to provide the condition to restrict the records to be returned by query. The result of query must satisfy the condition which is specified after WHERE.clause-

(V) ORDER BY : It specify the order in which the resultant records of query are required to appear. The basis of ordering is determined by the list of fields specified after the order by clause.
SQL Statement – ORDER BY Type, Code
In context of Account table, it implies that the resultant record sat is ordered by the Type field of Accounts and with in Type, by Code field of Accounts.

(VI) GROUP BY: It enables grouping of records for creating summary query. The fields after GROUP BY clause constitute the basis of grouping for which summary results are obtained.
SQL statement –
SELECT Debit Sum (Amount)
FROM Vouchers GROUP BY Debit
In this statement, the GROUP BY clause uses Debit Account Code as the basis for computing the sum of the amount of voucher.

Question 7.
Describe the ways to refine the design of a report.
Answer:
The design of the report can be created by any of the following methods :
• Auto Report
• By using Wizard
• By Design view

It may be improved or refined by making the following additions and modification to the report. For this purpose, an existing report is opened in Design mode.
(1) Adding Dates and Page Numbers
(2) Adding and Deleting Report Controls
(3) Conditionally Formatting Reports Control
(4) Grouping Levels and Sorting Order.

(1) Adding Dates and Page Numbers : When report opened in design mode, the page footer contain the current date and current page number of total number of pages.

The date control uses = Now ( ) function to retrieve the current date from RTC of computer. Format property of this control can modify the format of date by selecting General Date, Medium Date, Short Date or Long Date.
If a report is created using design view method, the date and/or time and page number may be added to any of its part.

The page number is added by clicking Insert % Page number from the menu bar to open the Page number dialog box, which allow the user to specify the format, position and alignment. The two formats are following:
(1) Page N (example Page 1)
(2) Page N of M (example Page 1 of 20)
The position to specify is either Top of page or Bottom of page. Possible alignment are at centre, left, right, inside and outside.

(2) Adding and Deleting Report Controls : After the designing report, additional report controls may be added or deleted. Clicking tool bar icon opens report design tool bar, which contains a set of useful controls.
(i) Open report in design mode.
(ii) Click Field List button on report design tool bar.
(iii) Drag the field into an appropriate section of the report. The field appears with both label and text box control.
(iv) A field control may be deleted by selecting the control and pressing the Delete key.

(3) Conditionally Formatting Report Controls : The Conditional Formatting allows the designer to apply special text format that depends on the value of field. This facility is a useful tool to draw the attention of user or reader of report to some values of particular interest, such as amount exceeding certain limit or unexpected balances in some accounts. Following steps are required to create a conditional formatting:
(i) Open report in design mode.
(ii) Select a control and click at Format on menu bar.
(iii) Click at Conditional Formatting.
(iv) Provide necessary conditions.
(v) The conditional formatting is deleted by re-opening the same dialog box and clicking at Delete button.

(4) Grouping Levels and Sorting Order :
Grouping Levels – The purpose of grouping is to organise the information content of a report into categories.
Sorting Order – It is meant to arrange such information content into numerical or alphabetical order.
When grouping and sorting of information, applied together, makes the report more meaningful and they are useful to the user of the report for decision-making purpose.

Question 8.
Explain the database design for producing the receipts the series of SQL statements for producing the payment side of Cash Book for Model-II.
Answer:
The following series of SQL Statement retrieve a record set of producing the payment side of cash book of Model-II :
(1) SQL Statement
SELECT Narration, Acc-code As Code Amount FROM vouchers As v, details As D WHERE tType = 1 AND V.VNO=D.VNO AND acc-code like “631 *”

(2) SQL Statement
SELECT Narration, Code, Amount FROM vouchers As v, Details As D WHERE tType = 0 AND V.VNO = D.VNO AND code Like “631*”

(3) SQL Statement
SELECT Narration, Acc-code As Code Amount FROM vouchers As v, Details As D WHERE tType = 1 AND V.VNO = D.VNO AND acc-code Like “631 *”
UNION
SELECT Narration, Code, Amount FROM vouchers As v, details As D WHERE tType = 0 AND V.VNO = D.VNO
ANDacc-code like“631*”
This SQL statement is source as Query D1

(4) SQL Statement
SELECT Code, Sum (Amount) As Total FROM Query Dl
GROUP BY code .
This SQL statement is saved as Query D2.

(5) SQL Statement
SELECT a. code b. name As [Name of Account],
IIF (a. total > 0, a total Null) As Amount.
FROM Query D2 As a, Account As b WHERE a code =b code .

Question 9.
Describe the series of SQL statements to produce trial balance database design for Model-11 is used.
Answer:
The following series of SQL statements retrieve, the record set for producing trial balance when database design for Model-Il Is used. In addition to this, the accounts have categorised within the trial balance according to the Account Type – Expense Revenues, Assets and Liabilities.

(1) To find the total amount by w hich the accountsbave been debited.
The transacted amount have been stored Aee Code of Vouchers Main and code of Vouchers Detail. C
SQL Statement for Vouchers Details –
SELECT code, SUM (amount), As total FROM vouchers Main INNER JOIN voucher details ON Voucher Main. VNO = Vouchers Details. VNO WHERE Type = 0
GROUP By Code; .
SQL Statement for vouchers Main tabic
SELECT AccCode as Code, Sum (aniqtmjl); As total ‘v- . FROM vouchers Main INNER JOIN voucher Details  Voucher Main. VNO “ vouchers Details
WHERE Type = 1
GROUP By AccCode;

Following SQL Statement merged both the above SQL Statements using UNION Clause –
SELECT Code, sum (amount), As total FROM vouchers Main INNER JOIN voucher Details ON Voucher Main. VNO = Vouchers Details. VNO WHERE Type = 0 GROUP BY Code;

UNION ALL
SELECT AccCode As Code, sum (amount), As total FROM vouchers Main INNER JOIN voucher Details ON Voucher Main. VNO = Vouchers Details. VNO WHERE Type = 1 GROUP BY AccCode;

This SQL Statement is saved on Query 101 for its subsequent use. The total of debit amount in this query represents the total with the positive amounts.

(2) To find the total amount by which the account have been credited.
In order to ascertain the total by which very transacted account has been credited the following SQL statements are required : SELECT Code, sum (amount)*-1, As total FROM vouchers Main INNER JOIN voucher Details ON . Voucher Main. VNO = Vouchers Details. VNO WHERE Type =1 GROUP BY Code, Amount UNION
SELECT AccCode As Code, sum (amount)*-!, As total FROM vouchers Main INNER JOIN voucher Details ON Voucher Main. VNO = Vouchers Details. VNO WHERE Type = 0
GROUP By AccCode, Amount;
In the above SQL statement, the sum of amount has been multiplied by -1 to ensure that amount of credit is always negative just as amount of debit is taken as positive.
This query is saved as Query 102.

(3) To find a collective record set of accounts with their debit and credit totals.
A collective record set is produced by forming a union query between Query 101 and Query 102 to ensure that the debit and credit amount with respect to each account becomes available for generating to net amount.
SQL Statement – SELECT*
FROM Query 101
UNION
SELECT*
FROM Query 102
It causes horizontal merger of Query 101 and Query 102.
This SQL statement is saved as Query 103.

(4) To find the net amount with which an account has been debited or credited.
SQL Statement
SELECT Code, Sum (total), As Net FROM Query 103 GROUP BY Code;
This SQL statement is saved as Query 104.

(5) To find the record set which consists of Account Code, Name of Account, Debit Amount and Credit Amount.
This query provide relevant information to the trial balance report, SQL Statement –
SELECT a. code b. name As [Name of account],
IIF (a. Net > 0, null) As Debit, I1F (a. Net < 0, abs (a. Net), null) As Credit FROM Query 104 As a, Account As b .
WHERE a.code = b.code;
This SQL statement is saved as Query 105 Trial Balance with sorting and Grouping levels.

(6) To find the record set of accounts with their category and category ID.
SQL Statement
SELECT Account Code, Accounts Name, Category, Cat ID
FROM Accounts
INNER JOIN Account Type ON
Accounts. Type = Account type. Cat ID;
This SQL statement is saved as Query 106,

(7) To find the record set consisting of Account Code, Name of Account, Debit Amount and Credit Amount along with category details.
SQL Statement
SELECT a.Code, b.Name As [Name of Account];
ILF (a.Net > 0, a.Net, pull) As Debit, IIF (a.Net < 0, abs (a.Net), (null) As Credit, Category, Cat ID
FROM Query 104 As a. Query s 06‘As b WHERE a.code = b.code; –
This SQL statement is saved as Query 107 to provide information details for designing trial balance with grouping and sorting of the accounts.

Question 10.
Using Model-1 discuss the series of SQL statements to produce a trial balance upto a particular date. ‘
Answer:
The fbl lowing series of SQL statements retrieve a record set for producing trial balance when database design for Model-I based.
(1) To find the total amount by which the accounts have bee ;
debited.
SQL Statement –
SELECT Debit As Code, Sum (amount). As total
FROM vouchers
GROUP BY Debit;  GR0UPJ3Y clause retrieves the rows of vouchers tafile accounts-
wise because bitfield refers to account code. This SQL statement ‘ is saved as Query 01. The total of debit amount in this query is given by Total field with positive amounts.

(2) To find the toMhmount by which the accounts have been ; credited.
SQL Statement –
SELECT Credit As Code Sum (amount)* (- S) As total
FROM vouchers GROUP BY Credit;
The sum of amount generated by Sum (Amount) is multiplied by -1 so that the final amount assigned to total field is always negative. The purpose of using negative values is to differentiate between debit and credit totals for each account and also to facilitate the simple arithmetic summation for obtaining the net amount.
This SQL statement is saved as Query 02.

(3) To generate a collective record set of accounts with their V debit and credit totals.
This collective record set is generated by executing a union query
between Query 01 and Query 02. Q
SQL Statement –
SELECT*
FROM Query 01
UNION
SELECT
FROM Query 02
This SQL statement is saved as Query 03.

(4) To generate the net amount with which an account has been debited or credited.
SQL Statement
SELECT Code, Sum (total), As Net FROM Query 03
GROUP 6Y Code …
A positive net amount implies a debit and negative amount means a credit balance corresponding to an account code. This SQL statement is saved as Query 04 use in generating record set for trial balance.

(5) To find that record set which consists of Account Code,Name of Acopamhi Debit Amount and Credit Amount.
SQL Statement –
SELECT a.code b.namg-As [Name of account],
IIF (a.Net > 0,-a.Net) As Debit,
IIF (a.Net < 0, abs (a.Net), null) As Credit As Credit
Query 04 As a, Accounts ASb .
Where 8 %.cctde = b.code;
This SOL statement is saved as Query 05 for providing the necessary  a formation content for Trial Balance Report.

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy Chapter 14 Structuring Database for Accounting Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Structuring Database for Accounting NCERT Solutions for Class 11 Accountancy Chapter 14

Structuring Database for Accounting Questions and Answers Class 11 Accountancy Chapter 14

Test Your Understanding

A. Indicate against each of the following statements, True or False :
(a) Every relation has at least one super key by default, which is the combination of all its attributes.
(b) Data transformation is called information.
(c) Referential integrity constraint arises because of relationships between various entities.
(d) The complete absence of WHERE clause in SELECT statement implies that no tuples of a relation shall be selected.
(e) ER model is an example of representational data model.
Answer:
(a) True
(b) True
(c) True
(d) False

B. Fill in the blanks, an appropriate word(s) :
(a) A ………. does not have key attributes of its own.
(b) The ………. for binary relationship specifies the number of relationship instances that an entity can participate in.
(c) Each simple attribute of an entity type is associated with a value set called ………. of values.
(d) When structure of AIS is based on both human and computer resources. It is called ………. AIS.
(e) A ………. is a collection of all entities of a particular entity type.
(f) A weak entity type always has a ………. constraint with respect to its identifying relationship.
(g) When a relation has more than one attribute with unique values, each such attribute is called ……….
Answer:
(a) weak entity
(b) computer based
(c) timeware
(d) liveware
(e) total participation
(f) multi-valued
(g) full functional

Short Answer Type Questions

Question 1.
State main categories of data models.
Answer:
Data models is a collections of concepts used to describe the structure of database. The main categories of data models are following :
(i) Reality
(ii) Data
(iii) Database
(iv) Information
(v) DBMS

(i) Reality-It consists of different components of an organisation such as people, facilities and other resources. It also includes that environment in which the organisation exists and operates. The continuous interaction with the environment in which organisation operates result in real world transaction. These transaction are analysed to identify the data

(ii) Data – Data can be anything such as number, a person’s name, image, account-name, entities, places, objects, events or even concepts. So, it is a set of isolated and unrelated raw facts, represented by values, which have little or no meaning. They have little or no meaning because they lack a content for evaluation. Data may be quantitative or qualitative and they may be of financial or non-financial character.

(iii) Database – Database is a collection of related data. A database is an integrated and logically collection of data. Data is collected and stored in such a way that a common and controlled approach is sufficient in adding new data and modifying and retrieving existing data with in the database.

Characteristics of Database :
(a) Integrated Property
(b) Shared Property
(a) Integrated Property – Database is integrated because in it distinct data tables have been logically organised to reduce or eliminate duplicity and better access.

(b) Shared Property – Database is shared i.e., all those who are authorised to use data have access to relevant data.
Accounting database is a collection of related accounting data to represent some aspect of an accounting information system.

(iv) Information – When data is processed and converted into a meaningful and useful form, it is known as information. It is a set of organised and validated collection of data. Information is a data that have processed and reined and then presented in a format that is important for decision making. Following diagram shows that information may be viewed as data at one level. But when it is processed it becomes information at another level.

— Producing ledger accounts
— Generating trial balance
— Prepare Profit & Loss Account and Balance Sheet

(v) Database Management System (DBMS)-DBMS is essentially a collection of interrelated data and a set of programs to access this data. This collection of data is usually called the database. It can be regarded as an electronic filing cabinet. Database system are designed to maintain large volume of data.

Management of data involves :

• Defining the structure for the storage of data.
• Providing the mechanisms for the manipulation of the data.
• Providing for the security of the data against unauthorized access.

The DBMS is a general purpose software system that facilitates the process of defining, constructing and maintaining data bases for various applications. A database management system is a collection of programs that enables user to create and maintain a database.

Defining a database involves specifying the data type, structure and constraints for the data to be stored in a database. Constructing the database is the process of storing two data itself on same storage medium that is controlled by the DBMS.

Manipulating a database includes some functions as querying the data base to retrieve specific data. Updating the data base to reflect changes in the reality and generating the reports from the date.

Question 2.
How are computers useful in processing the accounting data?
Answer:
The computerised accounting system is based on the concept of database. It does involve the process of creativity and maintaining journals, ledgers etc. It is one of the database-oriented applications wherein the transaction data is stored in a well-organised database.

The user operates on such database using the required and desired interface and also takes the desired reports by suitable transformation of shared data into information. Computers plays a very significant role in processing accounting data. Thiseliminates duplication of data, improves the flow of information and facilitates proper inventory- control, cost control, cash flow etc.

The computer makes the job of accounting department very simple and interesting. Maintaining subsidiary books, ledger, preparation of trial balance and preparation of financial statements etc. can be performed by computers quickly and very efficiently. Computers are very useful in processing the accounting data.

It becomes clear from the following :
(1) Processing with high speed – Computer require far less time than human beings in performing a task that is why it process accounting data very fast.

(2) Accurate Processing – Computer system eliminates duplication of data because the primary accounting data is entered once for all subsequent usage. This eliminates the possibility of error.

(3) Reliable Processing – Computers are immune to tiredness, boredom or fatigue. So, it is well-adapted to performing repetitive operations. The extent of reliability of processing accounting data by a computer is immense.

(4) Up-to-date Processing – All the related records in a computer get automatically update once the data is entered and stored.

(5) Efficiency in Processing – The computer based accounting system ensure better use of resources and time.

(6) Automate Document Production – Computer have standardised, user defined format of accounting report that generates automatically. The accounting report such as Cash Book, Trial Balance etc. are obtained just by click.

(7) Quality Processing – The input checks and untouchable features of data handling facilitate hygienic and true accounting processing that provides true accounting reports that are highly objectives and can be relied upon.
So, it is clear from the above points that computer is an electronic device which calculates, compares, modifies, stores and retrieves fact and figures, is being widely used in the field of accounting.

It has an inbuilt system of making calculations, collecting and processing accounting data and present the result in the form reports useful in decision making. It performs the functions of recording storing, posting, classification summarisation the accounting data.

Question 3.
What do you understand by accounting data? Discuss the stages through which it is finally transformed for being presented as information in financial statements?
Answer:
Data are facts and figures that $re not currently being used an a decision process and usually take the form of historical records that are recorded and field without immediate intext to retrieve for decision-making. Data are raw facts about a business and its business transactions.

So, we can say that accounting data are known facts that  can be recorded and which have implicit meaning. It may represent facts concerning people, places, objects, entities, events or even concepts. It may be quantitative and qualitative or they may be of financial character or non-financial character.

For example, consider the transaction :
April 01,2006 Ravi started business with Cash Rs. 1,00,000. This transaction has various data context like, ‘01’, 01-Apr-2006, Ravi Capital, Rs. 1,00,000 but these are not useful for decision making unless they are processed to suit to the requirements of decision making situations.

Accounting data is data related to the accounting transactions and used for making the financial statements. Anything which facilitates the accounting process is called accounting data. It may be people,  business transaction, environment, events etc. Accounting data therefore processed to get accounting information which is used for accounting processes i.e., to prepare vouchers, ledger, financial statements which ‘s, are very helpful in the decision making process.

Data Processing involves the techniques of collecting sorting, relating, interpreting and computing accounting data in such a manner as to provide meaningful and useful information or presenting financial statements. Data capturing, inputing, processing and generating information are the necessary steps involved in data processing cycle.

(1) Source Documents – The first step is to capture accounting data from accounting transactions so as to prepare voucher, that expresses and documents an accounting transactions. Vouchers are so designed as to permit the recording of a data in to a systematic manner.

(2) Input of Data – By using a pre-designed Data Entry Form, accounting data contained in vouchers is to be entered in a computer storage device. Data entry, form is designed in a manner that is similar to physical voucher document.

(3) Data Storage – A suitable data storage structure is required to provide for a blank data record. The above blank record is used for storing the input of data pertaining code of account, name of the account and category type to which it belongs.

(4) Manipulation of Data – The stored data is manipulated for necessary transformation to generate final reports. Such transformed data may be stored separately and subsequently used for generating final reports.

(5) Output of Data – The accounting reports such as ledger, trial balance etc. are obtained in a pre-designed format by accessing the transformed data.

Question 4.
What do you understand by database? How does it differ from DBMS?
Answer:
A database is a collection of related data. It is a collection of data flies integrated and organised into single comprehensive file system, which is arranged to minimum duplication of data and to provide conveninent access to information within that system to satisfy’ a variety of user needs. The data is collected and stored in such a way that a common and controlled approach is sufficient in adding new data and modifying and retriving existing data within the database. It is a shared collection of interrelated data tables, files or structure which are designed to meet the varied informational need of an organisation.

Database has two important properties :
(i) Integrated Property
(ii) Shared Property
(iii) Integrated Property – Database is integrated because in it distinct data tables have been logically organised to reduce or eliminate duplicity and better access.
(iv) Shared Property – Database is shared i.’e., all those who are authorised to use data have access to relevant data.

“A database is a computer file system that uses a particular for organisation to facilitate rapid updating of individual records, simultaneously updating of related records, easy access to all records, by all applications programs and rapid access to all stored data which must be brought together for a particular routine report or inquiry or a special purpose report inquiry. ” – GM. Scott

However, a database management system (DBMS) is a software system that allows access to data contained in database. It’s objective is to provide a convenient and effective method of defining, storing and retrieving the information contained in database. This is DBMS who makes possible to share data in the database among the multiple applications or users. DBMS is essentially a collection of inter-related data and a set of programs to access of this data. This data is collected in a database. DBMS are designed to maintain large volume of data.

Management of data involves :

• Defining the structure for the storage of data in database.
• Providing the mechanisms for the manipulation of the data stored in database.
• Providing for the security of the data against unauthorized access.

Database is different from DBMS because DBMS is a general purpose software system that facilitates the process of defining, constructing and maintaining data bases for various applications. A DBMS is a collection of programs that enables user to create and maintain a database.

Question 5.
What is meant by entity type? How is it different from entity set? Illustrate by giving suitable example from accounting reality.
Answer:
Entity – A “Thing” in the real world with an independent existence is called entity. An entity may be an object with a physical existence (for example, a particular person, car, house or employee) or it may be an object with a conceptual existence (for example : a company, a job etc.)

Entity Types and Entity Sets – A database usually contains groups of entities that are similar. An entity type defines a set of entities that have the same attributes. Each entity type in the database is described by its name and attributes.

In other words, an entity type is defined as a collection of entities, which share a common definition in terms of their attributes. Each entity type is assigned a name for its subsequent identification. The attributes of entity type are used to describe it in the data base. The value of attributes of an entity belonging to entity type are known as Entity Instance.

The collection of all entities of a particular entity type in the database at any point of time is called as entity set. The entity set is usually referred to using the same name as the entity type. An entity set is a collection of all entity instances of a particular entity type.

An entity set is a collection of all entity instances of a particular entity type. The set of entities pertaining to a particular entity type share the same set of attributes.
For example:
Entity Type : Accounts
Structure of entity type

Entity Set : Collection of entity instances of an entity type “Accounts”.

Question 6.
What do you understand by relationship type? How is it different from relationship instance and relationship set?
Answer:
Relationship among two or more entity types represents an interaction among their respective entities. In fact, whenever an attribute-” of are entity type refers to an other entity type, some relationship exists. Whenever an attribute (say debit) of are entity type (say vouchers) refers to another entity type (say accounts), there exists a relationship between these entities (voucher and accounts).

Relationship Type,- Whenever entities from different entity types are related to one another in a particular manner, they constitute a relationship type. In ER diagrams, relationship types are displayed as diamond shaped boxes, connected by straight lines to be rectangular boxes, which represent the participating entity types. A collection of relationships of the same type is called a relationship set.

A relationship type R among n entity types E₁, E₂, E_n defines a set of associations – or a relationship set – among entities from these entity types. As for the case of entity type, entity sets, a relationship . type and its corresponding relationship set are customarily referred to by the some name, R. Mathematically, the relationship set R is a set of relationship instance r₁ where each r. associates n individual entities (e₁, e_2, e_n) and entity e₁ in r is a member of entity type E_i ≤ 1 ≤ n.

Question 7.
What do you understand by multi-valued attribute? How is it different from complex and composite attribute? Illustrate by giving suitable example.
Answer:
Attributes are some properties of interest or characteristics that further describe the entity such as height, weight and date of birth in case of a person and code and name in case of accounts.

Multi-valued attribute – Most attributes have a single value for a particular entity, such attributes are called single valued. For example, age is a single-valued attribute of a person, in some cases an attribute can have a set of values for the some entity – For example, education of person, colour of car etc. Such attributes are called multi-valued attribute. A multi-valued attribute may have lower and upper bounds to constrain the number of values allowed for each individual entity.

Composite attributes – The composite attributes can be divided into smaller sub-parts to represent some more basic attributes with independent meanings. For example, name of a person that is normally sub-divided into First Name, Middle Name and Last Name is a composite attribute.

Complex Attributes – The multi-valued and composite attributes may be grouped to constitute complex ones. The parenthesis () are used for showing grouping of components of composite attributes. The braces {} are used for showing the multi-valued attributes.

For example, if a person can have more than one residence and each residence can have multiple phone, an attribute address phone for a person can be shown as :
(Address Phone ({Phone (Area Code, Phone Number)}, Address (Street Address(Number, Street, Apartment Number) City, State, Zip)} A complex attribute, Address Phone

Question 8.
What do you understand by the concept of weak entity used in data modelling? Explain the relevance of owner entity type, partial key and identifying relationship in the context of such modelling.
Answer:
Entity types, which do not have key attributes of their own are, called weak entity types. Such entity types are identified by being related to specific entities from another entity type in combination with some of their attribute value. Entities belonging to a weak entity type are identified by being related to specific entities from another entity type in combination with one of their attribute values.

We call this other entity type the identifying or owner entity type and we call the relationship type that relates a weak entity type to its owner the identifying relationship of the weak entity type.

A weak entity type always has a total participation constraints (existence depency) with respect to its identifying relationships, because a weak entity cannot be identified without an owner entity. A weak entity type normally has a partial key, which is the set of attributes that can uniquely identify weak entities that are related to the same owner entity.

Consider the entity type Dependent, related to Employee which is used to keep track of the dependents of each employee via 1 : N relationship. The attributes of Dependent are Name (the first name of the dependent), Birth Date, Sex and Relationship (to the employee), Twp dependents of two distinct employees may, by chance, have the same value for Name, Birth date.

Sex and Relationship, but they are still distinct entities. They are identified as distinct entities only after determining the particular employee entity to which each dependent is related. Each employee entity is said to own the dependent entities that are related to it.

In ER diagrams, both a weak entity type and its identifying relationship are distinguished by surroundings their boxes and diamonds with double lines. The partial key attribute is underlined with a dashed or dotted line.

Question 9.
What is a participation role? State the circumstances under which the use of role name becomes necessary in description of relationship types.
Answer:
Each entity type that participates in a relationship type plays a particular role in the relationship. The role name signifies the role* that a participating entity from the entity type plays in each relationship instance and helps to explain what the relationship means. For example, in the works .

For relationship type, Employee plays the role of employee or workers and Department plays the role of department or employer. The participation role specifies the existence of an entity depends on its being related to another entity via the relationship type.

Role name are not technically necessary in relationship types where all the participating entity types are distinct, since each participating entity type name can be used as the role name. However, in some case entity type participates more than once in a relationship type in different roles. In such cases the role name becomes essential for distinguishing the meaning of each participation.

Such relationship types are called recursive relationships. The supervision relationship type relates an employee to a supervisor, where both employee and supervisor entities are members of the same Employee entity type. Hence, the Employee entity type participates twice in Supervision. Once in the role of supervisor and once in the role of supervisory.

Question 10.
Define foreign key. How is this concept useful in relational data model? Illustrate with suitable example.
Answer:
Relational data model represents the database of collection of tables comprising different volumes.. It consists of rows and columns. The table name and column name are used to help in interpreting the meaning of volumes of each row. Each row of table is called a data record.

A key is a part of table that uniquely distinguishes it from other tables in a given relation. Keys will typically be used as links, i.e. Key value will appear in other relation to represent their associated table.

Foreign key – An attribute or combination of attribute in one table whose values must either match the parimary key in another table or be null. For example :
Table name: Employees
Primary key: EMPID
Foreign key:

Table name: Vouchers
Primary Name : V. No.
Foreign key : Prep. By and Auth. By

While referencing Employees, the vouchers relations makes use of its other attributes Prep By and Auth By. These attributes act as foreign keys to reference the topics of relation. Employees through its key attribute Empld. The values of Prep By and Auth By cannot be null because of total participation of vouchers in Prep By and Auth By relationship.

Question 11.
What is meant by NULL value? What are the reasons that lead to their occurrence in database relations?
Answer:
NULL values – Absence of a data item is represented by a special value called NULL value. There are three situation which may require the use of NULL value.

• When a particular attribute does not apply to an entity.
• Unknown because4t does not exist.
• Value of an attribute is unknown, although it exists.

In some cases a particular entity may not have an applicable value for an attribute. For such situation, a special value called NULL value is created. NULL can also be used if we do not know the value of an attribute for a particular entity.

An important is that of nulls, which are used to represent the value of attributes that may be unknown or may not apply to a tuple. A special value, called null, is used for these cases. In general, we can have several meanings for NULL values, such as :

• Value unknown.
• Value exists but is not available.
• Attribute does not apply to this tuple.

From the above discussion about the NULL value, it is clear that why it occurs in database relations.

Question 12.
Why are duplicate tuples not allowed in a relation?
Answer:
Each data record, which corresponds to a tuple of a relation, in a table must be distinct. That means no two tuples in a relation can have the same combination of values for all their data items. This is because that a relation, as set of tuples, has to have aH its tuples distinct by definition.

Every relation has at least one key by default, which is the combination of all its attributes. This is called super key. Any such ’ super key, therefore, specifies uniqueness constraint. Such combination, representing super key, may have redundant attributes, implying there by that a more useful concept is that of a key which has no redundancy. This can be shown by following diagram :

Question 13.
For which operations such compatibility is required and why?
Answer:
Relation Data Model represents the database as collection of relations (table) comprising different volumes. It consists of rows and columns. The table name and column name are used to help in interpreting the meaning of volumes of each row. Each row of a table is called a data record. Relational model is concept of an entity and attribute. An entity is like a noun and attribute is a property of an entity, in a relation a table is also called ‘relation’. Each table is made up of records.

Horizontal rows, known as tuple and vertical columns also known as attribute. A domain is a collection of all possible Values from which values for a given column are drawn. The number of attribute determine the degree of relation. The number of tuples in a relation are known as cardinality of the relation. Each relation can be identified by a unique name.

RDBMS organizes the data in the form of table (relation) and primary key field are identified. All the data manipulation are carried out on those relations. Related information may be derived from the user perspective in a meaningful way as new relation from these base relations. The final fundamental of term in relational DB is relationship.

All the entries in relation are single valued. Entries in column are all of the same kind, each column here has unique name. No two tuples in a relation are identical. Order of tuples does not matter. A relation is a set of tuples where in each tuple is an ordered list of values corresponding to attributes of relation. A relation scheme may be interpreted as a declaration in the nature of an assertion. Some relations represents facts about entries while other might represent facts about relationships.

Question 14.
What is the need for database normalisation?
Answer:
Normalisation is the process of refining the data model built by the ER diagram. The normalization technique, logically groups the data over a number of tables, with minimum redundancy of data. The entities or tables resulting from normalisation certain data items with relationship being represented by replication of key data items. The goal of a relational data base design is to generate a set of relation schemes that allow us to store information with minimum redundancy of data and allow us to retrieve information easily and efficiently. The approach followed is to design schemes that are in an appropriate form, one of the so called Normal Form.

Need for Normalisation :

• Improve database design.
• Ensures minimum redundancy of data.
• Reduces need to reorganise data when design is modified/ enhanced.
• Remove anomalies for data base activities.

Long Answer Type Questions

Question 1.
Discuss the basic concepts of Entity Relationship (ER) Model. Illustrate as to how an ER model is diagrammed.
Answer:
ER design is a formal blue print, with a pictorial presentation, in which Entity Relationship (ER) Model concepts are used to represent description of reality.

ER model is a popular conceptual data model, which is mostly used in database-oriented applications. The major elements of ER Model are entities attributes, identifiers and relationships that are used to express a reality for which database is to be designed.

While preparing an ER diagram the following symbols are used to represent different types of entities, attributes, identifier and relationships.


E – R model is commonly used for the following purpose :
(1) To translate different views of data among managers user and programmers to fit into a common framework.
(2) To define data processing and constraint requirements for meeting the different views.
(3) To help in the implementation of the database.
Entities – Anything in the real world with independent existence is called entity. For example, Accounts, Vouchers, Employees, Account type etc. are entities.

Attributes – Attributes are the characteristics which describes the entities. An entity has a value for each of its attributes which is the data stored in the database.

Identifier or Key Attributes – Normally every entity type has one of its attribute, which contain unique values for identifying instance. For example, code is the key attribute of entity type account because its data value are required to be unique.

Relationships – Relationship among two or more entity types represents an interaction among their respective entities. For example, whenever an attribute (say Debit) of one entity type (say Voucher) refers to another entity type (say Account), there exists a relationship between these entities (Voucher and Account).

Weak Entity Types – Entity Types which do not have identifier of their own are, called weak entity type. Such entity type are identified by being related to specific entities from another entity type in combination with some of their attributes value.

By using a hypothetical example of an accounting system following initial design based on ER Model concepts becomes the starting point.

Entities – Voucher, Accounts, Employees, Support Document and Account Type.

Vouchers : Voucher No., Serial No., Voucher Data, Debit A/c, Credit A/c, Amount, Narration, Authorized By, Prepared By, are the attributes.

• Debit and Amount are multi-valued attribute.
• Credit and Amount are multi-valued attribute.
• Voucher No. and Serial No. are key attribute.

Accounts: Code Name, Type are attributes.

• Code and Name are key attributes.

Employees: Employee ID, Name, Address, Phone, ID of Immediate Boss are the attribute.

• Name is a composite attribute.
• Employee ID is the key attribute.

Account Type : Cat ID and Category are the attributes.

• Cat ID is key attribute.

Support : S.No. and Name are the attributes.

• S.No. is a key attribute.

ER Model Representation:
(i) Accounting Database:

(ii) Account Type :

(iii) Employee

(iv) Account :

(v) Vouchers :

(vi) support:

Question 2.
What integrity constraints are specified on database schema? Why is each considered important?
Answer:
There are two integrity constraints which are specified on database schema.
(i) Entity Integrity Constraint
(ii) Referential Integrity Constraint

(i) Entity Integrity Constraint – The entity integrity constraint states that no primary key value can be null. This is because the primary’ key value is used to identity individual tuples in a relation. Having NULL value for the primary key implies that we cannot identify some tuples. For example, if two or more’tuples had null for their primary keep, we might not be able to distinguish them if we tried to reference them from other relations.

(ii) Referential Integrity Constraint – Key constraint and entity integrity constraint are specified an individual relations. The referential integrity constraint is specified between two relations and is used to maintain the consistency among tuple in the two relations. Informally, the referential integrity constraint states that tuple in one relation that refers to another relation must refer to an existing tuple in that relation.

In referencing Account Type, Accounts relation uses its attribute Type, which acts as foreign key to reference the tuples of relations. Account type cannot be null because of total participation of Accounts in classify relationship. Similarly, consider another example in which the relation Vouchers (V.No., S.No., V. date, Debit Amount, Credit Amount, Prep. By, Auth. By, Narration) reference two other relations as shown in figure.

First, it reference. Accounts (Code, Name, Type). In referencing Accounts the Voucher relation uses its attributes Debit and Credit, which act as a Foreign key to reference the tuples of relation. Accounts through its primary key, Code. The value of Debit and Credit cannot be null because of total participation of vouchers in debit and credit relationship.



Second, it references Employees (Emp ID, FName, MName, LName, Address, Phone No. Super ID) while referencing Employees, the Vouchers relation makes use of its other attributes Prep. By and Auth. By. These attributes act as foreign keys to reference the tuples of relation Employees through its key attribute Emp ID. The vaiue of Prep. By and Auth. By cannot be null because of total participation of vouchers in Prep, by and Auth. by relationships.

All integrity constraints should be specified on the relational database scheme if we want to enforce these constraints on the database states. Hence, the DDL includes provisions for specifying the various types of constraints so that the DBMS can automatically enforce them.

Most relational DBMS’s support key and entity integrity constraints and make provisions to support referential integrity. These constraints are specified as a part of data definition. That is why each integrity constraints are important.

Question 3.
Discuss the different types of update operations in relation to the integrity constraints which must be satisfied in a relational database model.
Answer:
The operation of the relational model can be categorized into retrievals and updates.
There are three basic update operations on relations :
(i) Insert,
(ii) Delete
(iii) Modify

(i) Insert – Insert is used to insert a new tuple or tuples in a relation. For example, an attempt to insert another record of an account with data values corresponding to Code, Name and its Type to Accounts relation shall be made by performing Insert Operation. The insert operation is capable of violating the integrating constraints.

(ii) Delete – Delete is used to delete tuples from relation. A particular data record from a table can be removed by performing such an operation. The delete operation can violate only referential integrity, if the tuple being removed is referenced by foreign key from other tuples in the database.

(iii) Update or Modify –  Update is used to change the value of some attributes in existing tuple. This is useful in modifying existing values of an accounting record in a relation. Usually this operation does not cause problems provided the modification is directed or neither primary key nor foreign key. Whenever these operations are applied, the integrity constraints specified on the relational database scheme should not be violated. We must enforce integrity constraints specified on the relational data scheme.

Question 4.
Discuss the steps you would take to transform on ER ‘ Model into various relations of Relational Data Model. Give suitable examples.
Answer:
The guidelines required to design the relational database schema attempt to provide a step-by-step procedure that transforms ER design into Relational Data Model design to constitute the desired database. In the context of ER Model given below, the following steps are required to cause its transformation into relational data model :

(i) Creating a relation for every strong entity – For each strong entity type in ER Model, a separate relation that includes all the simple attribute of that entity is created. Choose Primary Key from Key attributes Separate Relation for strong entities have created with primary key shown below’:

• Employee
  (Emp Id, Fname, Lname, Address, Phone No., Super ID)
• Accounts
  (Code, Name, Type)
• Vouchers
  (Vno, V Date, Debit, Amount, Credit, Narration, Prep. By, Auth. By)
• Accounts Type
  (Cat ID, Category)

(ii) Create a separate relation for each weak entity type –  For every weak entity type, a separate relation is created by including its attributes. The Primary Key of this relation is the combination of its unique attribute(s) for a particular tuple of the owner relation along with Primary Key attribute of such owner relations.

For example, Supprt Entity, with Vouchers as its owner entity, does not have a primary key of its own. It has partial key which is the Sno assigned to each document. Therefore, the primary key of voucher, Vno along with Sno is designed as composite key for support entity and the relation so formed is given below :

• Support
  (Vno, Sno, D. Name, S. Date)

(iii) Identify entity types participating in binary 1: N relationship type – Identify, the first relation on n-side of relationship and second on 1 – side of such relationship. The primary key of second should be included in first relation as its foreign key.

(iv) Identify entity type participating in binary M: N relationship type – For each binary M : N relationship type, create a new relation to represent such relationship. This new relation should include as foreign keys, the primary keys of the relations that represents the participating entity types.
Finally, the following relations have been formed to constitute the relational data model for one example reality.

• Employee
  (Emp Id, F name, L name, Address, Phone No., Super ID)

Project Work

Question 1.
Consider the following reality in a business enterprise, which is engaged in trading activity.
* It buys and sells a given number of items each of which is uniquely identifiable. Each unit of item is expressed in numbers or Kilograms.
* It procures its supplies from a given number of suppliers who can supply any number of items at a time. Each transaction is on credit for a particular period of time expressed in days.
* It sells various items to its customers on credit for a definite period of time expressed in days.
* Each purchase is made through a regular invoice, which has its distinct number for the supplier. It is duly dated, mentions the items being transacted, their quantities and prices and total amount of invoice.
* Design an ER schema for a database application for purchase and sales accounting and also show as to how it shall be transformed into various relations of a relational data model.
Answer:
ER Schema
Entities – Items, Suppliers, Customer, Purchase Invoice

Attributes
Items – Item Code, Item Name are the attribute.
* Item Code is the Key attribute.

Suppliers – Vendor Code, Vendor Name, Address, Phone
Item Supplied, Credit period are the attribute.

* Vendor Code is the Key attribute.
Customers – Customers Code, Customer Name, Address, Phone
Item Purchase, Credit period are the attributes.

* Customer Code is the Key attribute.
Purchase Invoice – Invoice No., Invoice Date, Quantity, Rate, Amount
* Invoice No. is the Key attribute.
Answer:

Question 2.
Following transactions of M/s Soumya Enterprises are given to you for the period ending March 31,2002.

All these transactions have been stored in database tables as shown below under (Model-I of database design). Data in Accounts table appears as follows :

Show how will these transactions appear as accounting data in following vouchers table.

V no. – identify of a transaction stored through a voucher
V date – to date of transaction
Debit – to code of account being debited
Amount – Amount of transaction
Credit – Code of account being credited
Narration – Narration of transaction.
Answer:

Question 3.
M/s Soumya Exports set up a garment export business on March 1,2002. Their transactions for the month ending March 31,2002 are given below :


All these transactions have been stored in database tables as shown below under (Model-I of database design). Data in Accounts table appears as follows :

Show how will these transactions appear as accounting data in following accounting data tables

V. no: Identify of a transaction stored through a voucher
V date : Date of transaction
Acc_code : Code of account, being debited or credited
Code : Codes of accounts being credited or debited, depending on value of Vtype (= 0, means codes being debited, 1 means codes being credited)
S.no.: Serial number of accounts being debited in debit voucher and those being credited in credit voucher
Vtype: 0 = means debit voucher, 1 = credit voucher
Amount : Amount of transaction
Narration : Narration of transaction.
Answer:

Question 4.
Write relational operation expressions and relevant SQL statements for following queries using Database Design Model-I and Model-II:
(a) Retrieve the voucher details and type of voucher authorised by a particular employee.
(b) Retrieve every bank payment voucher details, account name, amount. You are given that bank account code = “632001”.
(c) Find details of cash vouchers pertaining to an expense account whose account code = “711003”. You are given that cash account code = “631001”. ’
(d) Make a list of accounts and amount with respect to which a voucher has been either prepared or authorised by a particular employee.
(e) Retrieve details of vouchers without support documents.
(I) List details of documents with at least one support documents.
(g) Find all vouchers with total amounts raised during a particular month.
(h) Retrieve all vouchers prepared by an employee whose First name is “Smith”.
Ans.
(a) Relational Operation expression SELECT MAJOR = “A001” from the relation (table) VOUCHERS SQL Statement SELECT* .
FROM VOUCHERS WHERE Auth By = ‘A001’

(b) Relational Operation expression
JOIN VOUCHER table and ACCOUNTS table > Over Credit = “632001”
SQL Statement SELECT Details, Name FROM VOUCHERS, ACCOUNTS WHERE Credit = “632001”

(c) Relational Operation expression
JOIN VOUCHER fcjble and ACCOUNTS table Over Debit = “711003” and Credit = “631001” SQL Statement SELECT*
FROM VOUCHERS, ACCOUNTS
WHERE Debit = “711003” and Credit = “632001”

(d) Relational Operation expression
JOIN VOUCHERS table and ACCOUNTS table
Over Prep. By = “S001” and Auth. By = “A001”
SQL Statement
SELECT Name, Amount
FROM VOUCHERS, ACCOUNTS
WHERE Prep. By = “S001” or Auth. By = “A001”

(e) Relational Operation expression
JOIN VOUCHERS table, and ACCOUNTS table Over Vno ^ Vno SQL Statement SELECf*
FROM VOUCHERS, SUPPORTS WHERE Vno * Vio ‘

(f) Relational Operation.expression
JOIN VOUCHERS table and SUPPORT table Over Vno = Vno SQL Statement
SELECT!*
FROM VOUCHERS, SUPPORTS WHERE Vno = Vno

(g) Relational Operation expression PROJECT Vno, Amount > *
from the relation (Table) VOUCHERS SQL Statement SELECT Vno, Amount > *
FROM VOUCHERS

(h) Relational Operation expression
JOIN VOUCHER table and EMPLOYEES table Over Name = “Smith”
SQL Statement
SELECT Vno, V date, Amount, Narration , FROM VOUCHERS, EMPLOYEES WHERE F Name = “Smith”.

Question 5.
Write relational operation expression and relevant SQL statements for following queries using Database Design Model-l and Model-II:
(a) Retrieve all vouchers pertaining to a particular account with amounts ranging between Rs. 10,000 to Rs:20,000.
(b) Retrieve details of each voucher whose support docu ment has the same date as that of the voucher itself,
(c) Retrieve details of voucher authorised by employees who do not have supervisors.
(d) Find sum of cash payments, maximum payments, minimum payments and average.
(e) Find sum of cash payment, maximum and minimum amount with respect to a particular account code.
(f) Retrieve every bank payment voucher details, account name, amount pertaining to a particular period pertaining to a particular expense account.
(g) Find details of cash vouchers pertaining to a particular expense account.
(h) Make a list of accounts and amount with respect to which a voucher has been either prepared or authorised raised during a particular month.
(i) Find all vouchers with total amounts raised during a particular month.
(j) Retrieve all vouchers prepared by an employee whose last name is Dev.
(k) Retrieve details of each voucher whose support document has the same date as that of the voucher itself.
Answer:
(a) Relational Operation expression
SELECT MAJOR = “Amount” between Rs. 10,000 to Rs. 20,000
from the relation (tables) VOUCHERS SQL Statement SELECT Vno Amount FROM Vouchers .
WHERE Amount between Rs. 10,000 and Rs. 20,000

(b) Relational Operation, expression
JOIN VOUCHERS table and SUPPORT table Over V Date = V date * SQL Statement SELECT * ‘
FROM Vouchers, Supports WHERE V Date = V date

(c) Relational Operation expression SELECT MAJOR = “Auth. By = A001” from the relation (table) VOUCHERS SQL Statement
SELECT *
FROM Vouchers WHERE Auth. By = “A001 ”

(d) Relational Operation expression
SELECT Debit As Code, SUM (Amount) As Total Min (Amount) As Minimum Arg (Amount) As Average, Max. (Aifiount) As Maximum From the table VOUCHERS
SQL Statement
SELECT Debit as Code, Sum (Amount) As Total, Min (Amount). As Minimum, Max (Amount). As Maximum, Avg. (Amount) As Average.
FROM Vouchers .
WHERE Debit like “631”
Group By Debit

(e) Relational Operation expression
‘ SELECT Debit As Code = “711001”, Sum (Amount) As Total, Min. (Amount) As Minimum, Avg. (Amount) Average, Max. (Amount) As Maximum from the table Vouchers SQL Statement
SELECT Debit As Code, Sum (Amount) As Total, Min. (Amount) As Minimum, Max. (Amount) As Maximum, Avg. (Amount) As Average.
FROM Vouchers WHERE Debit like “631”

(f) Relational Operation expression
JOIN VOUCHERS table and ACCOUNTS table Over V Date between I and 2 SQL Statement
SELECT V No, V Date, Amount, Name, Code FROM Vouchers, Accounts
WHERE Code = “632001 ” and V date between Date 1 and Date 2

(g) Relational Operation expression
JOIN VOUCHERS table and ACCOUNTS table over Debit = “711” and Credit = “631 ”
SQL Statement SELECT *
FROM Vouchers, Accounts WHERE Debit = “711*” and “631 *”

(h) Relational Operation expression
JOIN VOUCHERS table and ACCOUNTS table
Over Prep, by = “S001 ” or Auth. by = “A001 ”
SQL Statement
SELECT Name, Amount
FROM Vouchers, Accounts
WHERE Prep. By = “S001” or Auth. By = “A001”

(i) Relational Operation expression PROJECT Vno. Amount > * from the relation (table) Vouchers SQL Statement
SELECT V No, Amounts > *
FROM Vouchers

(j) Relational Operation expression
JOIN VOUCHERS table and EMPLOYEES table Over L Name = “Dev”
SQL Statement
SELECT Vno, V date, Amount, Narration, L Name FROM Vouchers, Employees WHERE L Name = “Dev”

(k) Relational Operation expression
JOIN VOUCHERS table and SUPPORTS tabie Over V date = S date SQL Statement
SELECT V No, V Date, S No, S Date, Amount FROM Vouchers, Supports WHERE V Date = S Date.

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy Chapter 13 Computerised Accounting System Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Computerised Accounting System NCERT Solutions for Class 11 Accountancy Chapter 13

Computerised Accounting System Questions and Answers Class 11 Accountancy Chapter 13

Test Your Understanding

I. Fill in the blanks :
(i) The framework of storage and processing of data is called as ……………..
(ii) Database is implemented using ………….
(iii) A sequence of actions taken to transform the data into decision useful information is called ……………..
(iv) An appropriate accounting software for a small business organisation having only one user and single office location would be ……………..
Answer:
(i) Operating Environment
(ii) DBMS
(iii) Data Processing
(iv) Ready to use

Short Answer Type Questions

Question 1.
State the four basic requirements of a database applications.
Answer:
A computerised accounting system is an accounting system that records and process the accounting transactions and events and produces the reports as per requirement of the user, according to Generally Accepted Accounting Principles (GAAP).

Modern accounting system uses the concept of database. It is implemented using a DBMS i.e Data Base Management System. A Database is a collection of related information stored so that it is available to many users for different purposes. The management of data in a database system is done by means of a general purpose software package which is called Data Base Management System.

Computerised accounting system based on database application is a system where data is collected, stored, processed and interpreted to generates the report for decision-making purpose of management.

The use of computer in any database-oriented application has four basic requirements which are following :
(1) Front-end Interface
(2) Back-end Database
(3) Data Processing
(4) Reporting System.

(1) Front-end Interface – It is an interactive link between the user and the database-oriented software, through which the user communicates to the back-end database.
(2) Back-end Database – It is the data storage system that stores data hidden from the user, it responds to the requirement of the user only to the extent he is authorised to access.
(3) Data Processing – It is a sequence of action that makes data an information. In other words, it is the process of transaction of data into information useful for taking decision by sequence of actions.
(4) Reporting System – It is the system which helps in composing all the information in some integrated form that constitute the report.

Question 2.
Name-the various categories of accounting package.
Answer:
Today, there are number of readymade software accounting packages that are available in the market. Since the application in the area of accounting are standard, difference is in the number of features provided by an individual package. Every accounting package is implemented to perform, recording, classifying, storing and summarising of accounting data and generates reports according to requirement of the user.
The accounting package are classified into following categories:
(1) Ready to use
(2) Customised
(3) Tailored.
(1) Ready-to-use – Ready-to-use software package is suited to small organisation who have low volume of transaction. The cost of installation is low and the number of user is also limited. Ready- to-use package is relatively easier to learn, so its training need less time and sometimes even the vendor of this package offer free training. The level of secrecy of this software is low thus the software is highly prone to data frauds. This type of software offer very little scope of linking to other information system. Some of the ready-to-use accounting softwares available in the market are Tally, Ex., Busy and The Professional Accountant.

(2) Customised – Accounting software may be customised to meet , the special requirement of the customer. It means making changes in the ready-to-use software package to suit the specific requirement of the user.
Customised software packages is suited to large and medium organisations. The cost of installation and maintenance is relatively high because a high cost is to be paid to vendor for customisation.

It is relatively difficult to learn as it include modification and addition to the software contents. It is important to train software user, so the training cost are high. The level of secrecy of data and software can be better maintained in customised software. This software can be linked to the other information systems.

(3) Tailored – It refers to designing and developing user specific software. These are developed on the basis of discussions between the user and developers. This type of software packages are usually required in large business organisation. The cost of installation and maintenance is very high. It requires special training because it is difficult to learn. They involves sophisticated application so their training cost are very high. The level of secrecy and authenticity checks are robust in such software. They can be effectively linked to some specific information systems.

Question 3.
Give examples of two types of operating systems.
Answer:
Operating system is an organised collection of software that controls the overall operations of a computer. It is a very complex and intricated programme that basically supervise and direct the operations of the computer for the user. Operating system isolates the user of the computer from the technicalities of the actual working of the computer.

They are rather like the secretaries in the office who isolate the manager from having to worry about where the various files are stored or wasting time in making phone calls or fixing appointments etc. The user of the computer then has to only concentrate on providing instruction for the specific application to be performed.

The nitty-gritty of how the instruction will actually be executed are handled by operating system. So, the operating system is a powerful software that handle programme execution, processes commands and manages the various devices attached to the computer.

There are two types of operating systems :
(1) Single-User Operating Systems
(2) Multi-User Operating Systems.

(1) Single-User Operating Systems – The Personal Computer (PC) is small, general purpose system that can execute programmes to perform in a wide variety of tasks. The PC, however, was designed for use by one person at a time, that is, it is single-user oriented with MS-DOS as the de facto standard operating system for this range of machines. Single-user operating systems became very popular d’ e to the low cost hardware and wide range of software available ; K these machines.

(2) Multi-User Operating System – As opposed to single-user systems, there are also larger system, which more than one person can use at any time. Such systems are referred to as multi-user operating systems. Multi-user systems would be required when a number of applications have to run simultaneously, or common resources, like printers and disks, are to be shared by a number of users.

Multi-user operating systems are expected to handle multiple user as well as multiple peripheral devices concurrently. Such operating systems have to be more efficient and sophisticated than simpler single-user operating systems. Unix, Linux were designed for a multi-user system

Question 4.
List the various advantages of computerised accounting systems.
Answer:
Advantages of Computerised Accounting System – The computerised accounting system of accounting has various advantages which are following :

(1) High speed – Computer system process accounting data at a very high speed and consume less time.

(2) Accurate – If the data entered in computer is correct then the possibility of error in processing is eliminated.

(3) High reliability – Computers are immune to tiredness, boredom or fatigue. It is well-adapted to performing repetitive operations. So, this system is highly reliable.

(4) Up-to-date information – All the related accounting records in a computerised accounting system get automatically updated when any data is entered and stored. So, it always produces the up-to-date information.

(5) Large volume of transactions – The computerised accounting system can store and process large volume of transactions with great speed and accuracy.

(6) Realtime user interface – Most of the modern computerised accounting system are inter-linked through the network of computer. It facilitates the availability of information to different user at the same time.

(7) Less paper work – In computerised accounting system, paper work is very less.

(8) Automated document production – Computerised accounting system have standardised user-defined format of accounting reports that are. generated automatically.

(9) Efficiency – Computerised accounting system ensure better and efficient use of resources and time.

(10) Scalability – Computerised accounting system is scalable to handle the growing transactions.

(11) Legibility-The data, information and reports displayed on computer monitor is legible.

(12) Quality reports – Inbuilt checks and untouchable features of data handling features produce true and quality reports by the computerised accounting system.

(13) MIS reports – The computerised accounting system facilitates the generation of management information reports at a very high speed, which will help the management to control the organisation effectively.

(14) Lower cost-The cost of maintaining the books of accounts is low in computerised accounting system.

(15) Storage and retrieval – Computerised accounting system does not need large amount of space for storing the data , because it stores data in CDs. hard disks etc. This system also permits fast and accurate retrieval of data as and when required.

(16) Queries – Replies of queries is very fast under the computerised accounting system.

Question 5.
Give two examples each of the organisations where ‘ready-to-use’, ‘customised’ and ‘tailored’ accounting packages respectively and suitable to perform the accounting activity.
Answer:
The suitability of accounting package depends upon the various factors, i.e.,
(1) Size and nature of the business
(2) Volume of transactions
(3) Special requirements of organisation
(4) Need for online network of information
(5) Training requirement.
For small size, conventional business where volume of transaction is not much and no need of network of information. Ready-to-use accounting package is suited. Its training is also easy and small business V has not any special requirement for accounting. Then only need the standardised accounting package.

Examples – Small departmental stores, sole-tradership business, CAs. school, college, restaurant etc. For medium and large business v where volume of transaction is large and is need of information network requires customised accounting package. For example, big departmental stores, shopping malls, hospitals etc.

For large typical business with geographically scattered locations tailored accounting package is best suited. For example, banking, mobile phone service etc.

Question 6.
Distinguish between a ‘ready-to-use’ and ‘tailored’ accounting software.
Answer:
Ready-to-use accounting software is available off-the-shelf. These are net user-specific but for the large number of users. .It is developed by the group of professionals. It is easy to Seam and cost effective. Tailored accounting software are not available off-the-shelf, ft is user-specific software. It is designed and developed by group of professionals on the basis of discussions with the user.

Difference between a ‘Ready-to-use’and ‘Tailored’ accounting software :

Long Answer Type Questions

Question 1.
Define a computerised accounting system. Distinguish between a manual and computerised accounting system.
Answer:
Accounting is called the language of business. It communicates financial information to variety of users for preparing financial reports. It is considered as a system which collects and. processes financial information of an enterprise and reports that information to user to enable them to make appproriate decisions. Accounting helps to summarise a lot of financial transactions and events and enable the accountants to convey economic information to its user.

It is very important that accounts of different enterprise are prepared on uniform basis and an enterprise maintain consistency in preparation of financial accounts over a period of time. To have uniformity and consistency in preparation and presentation of financial accounts, accounting operates w ithin a framework of ‘Generally Accepted Accounting Principles’ (GAAP).

When the accounts are maintained with the help of computer, it is called Computerised Accounting. Most of the computer programmes help in proper basic recording of business transaction. Now-a-days computer is being w idely used in the field of accounting It, itself can do the calculations, collects, process accounting data and presents the results in the form of proper reports to the management for decision making purpose.

It also performs the function of recording, posting, classification, summarisation and interpretation of results.
A computerised accounting system is an accounting information system that records and process the accounting transactions and events and produces the reports as per requirement of the user, according to Generally Accepted Accounting Principles (GAAP).

The framework of storage and processing of data in computerised accounting system is called the operating environment. Operating environment of computerised accounting system consists of hardware and software of the computer system. They are both dependent to each other. The type of software determines the structure of hardware whereas selection of hardware depends upon the type and number of user, size of organisation, network and working of the organisation, extent of working etc.

Modem computerised accounting system uses the concept of database. It is implemented using a DBMS i.e. Data Base Management System. Computerised accounting system based on database application is a system where data is collected, stored, processed and interpreted to generate the report for decision making purpose of management.

Difference between Manual and Computerised Accounting System – As we know that, accounting is the process of identiying recording, classifying and summarising financial transactions to generate the financial reports. Let us compare manual and computerised accounting system on the basis of above definition.

(1) Identifying Financial Transactions – The identification of financial transaction on the basis of accounting principles are same in both the systems.

(2) Recording of Transaction – The recording of transaction in the proper books of accounts, performing arithmetical functions is carried out manually in manual accounting system. In computerised accounting system only transaction is recorded in the books of accounts and other functions is done automatically. Data is stored in well-designed accounting database.

(3) Classifying Transactions – In the manual system, transactions . from the books of accounts are posted into ledger accounts. It means that data is duplicated. In computerised system data is not duplicated. The stored data is processed by software and produced as classified.

(4) Summarising – In manual system, the transactions in each ledger accounts are summarised i.e. balance of each account is ascertained and prepare the trial balance. Therefore, preparation of ledger is must in manual system.
In computerised system, the transaction stored in well-designed database processed to prepare trial balance. Ledger accounts are not necessary to get the trial balance in this system.

(5) Adjusting Entries – In manual system, these entries make to adhere to cost matching revenue principle. Some other entries are also made to rectifying the errors. In computerised system, there is no need of passing adjusting entries for errors and rectification, except for rectifying an error of priniciple by having wrong recording.

(6) Financial Statements – In manual system, financial statements i.e. Trading Account. Profit & Loss Account and Balance Sheet are prepared on the basis of trial balance. In computerised system, .there is no such requirement of trial balance. The generation of financial statement is independent to trial balance by direct processing of stored data.

(7) Closing the books – After the year-end, preparation is made for the next accounting period by passing the closing entries. The balances of nominal accounts transferred to the Trading and Profit & Loss Account and of other accounts, closing balances transferred as the opening balance for the next accounting period. In computerised system, the process of closing books is performed by computer itself and the opening balances for the next according period are stored in the database.

Question 2.
Discuss the advantages of computerised accounting system over the manual accounting system.
Answer:
The computerised accounting system has several advantages over manual accounting system.

(1) High speed – In computerisec accounting system, accounting data is processed much faster than that of a manual system.

(2) Accuracy – The possibility of error is eliminated once a particular data is fed in computerised system. It is 100% accurate. The results produced by manual system can vary due to carelessness, tiredness etc.

(3) Reliability – The computer system are immune to tiredness, boredom or fatigue. It is well-adapted to performing repetitive operations. So they are more reliable than manual systems.

(4) Up-to-date information – In computerised systems, all accounting records are updated automatically as and when, they are entered and stored. In manual system all the records will have to be altered one by one.

(5) Large volume of transactions – Computerised system can store and process large volume of transactions with great speed and accuracy than manual system.

(6) Realtime user interface – Computerised systems are inter¬linked through a network of computers, which facilitates the availability of information to different user at the same time whereas it is not possible in manual system.

(7) Less paper work – In computerised system paper work is less as compared to the paper work in manual system.

(8) Automated document production – Statement of accounts are obtained in a standardised user-defined format just by click of mouse in computerised accounting system which is not possible in manual system. It takes time.

(9) Efficiency – Computerised system ensures better use of resources .and time as compared to manual system.

(10) Scalability – Computerised accounting system is scalable to handle the growing number of transaction as compared to manual system.

(11) Legibility – In computerised system characters are type written using standard fonts so they are legible.
There is untidy written figures in a manual system.

(12) Quality reports – Reports produced by computerised system are highly objective and reliable because of inbuilt check, which is not possible in manual system.

(13) “MIS reports – The computerised system facilitates the generation of the MIS reports at a very high speed whereas the generation of the same reports manually is very time consuming and less accurate.

(14) Storage and retrieval – The storage of data in computerised system does not require a large amount of physical space, because it stores data in CD-ROMs, hard disks, floppies etc. which requires very few space in comparison to books of accounts prepared under manual system. It also permits the fast and accurate retrieval of accounting data as and when required.

(15) Lowercost – The cost of maintaining the books of accounts under the computerised system is lower than the cost under the manual system.

(16) Queries – Replies of queries under the computerised system is obtained easily.

Question 3.
Describe the various types of accounting softwares along with their advantages and limitations.
Answer:
Today, there are number of ready-made software packages that are available in the market. Since the application in the area of accounting are standard, difference is in the number of features provided by an individual package. An accounting software is an integral part of the computerised accounting system.

Types of Accounting Software
(1) Ready-to-use
(2) Customised
(3) Tailored.

(1) Ready-to-use – Ready-to-use accounting software available off the shelf. They are not user-specific for the large number of users. It is suited to smaU/conventional business organisation where the frequency or volume of transactions is low. The cost of installation and maintenance is low and its user is also limited. It is easierto learn, so training cost is very low. This is prone to data frauds because the level of secrecy is relatively low. It offer little scope of linking to other information systems.

Advantages :

• Ready-to-use software is developed by the group professionals having varied experience.
• It has better after sale maintenance service.
• It is used by number of users, so the accounting persons who have the knowledge of this are easily available.
• It is cost effective.
• It save time in installation and learning.

Limitations :

• It will give misleading results, if the grouping of accounts is incorrect.
• Their software are window based software, the output in physical form is a slow process.
• The level of secrecy is low, as it is prone to data frauds.
• It is not linked with the other information system.

(2) Customised – Ready-to-use software can be customised to meet the special requirement of the user. The developer, to meet the specific user requirement can modify the ready-to-use software. The user bear the cost of modifications. It is suited to large and medium business organ isation. It can be linked to other information
system. Secrecy of data and software can be better maintained in this software. .

Advantages :

• It is user-specific.
• It can be linked to other information system.
• The level of secrecy is good so data and software can be better maintained.
• It has better after sale service.
• It is cost effective.

Limitations:

• Cost of installation and maintenance is high because high cost is paid to developer to modify the ready-to-use software.
• Training cost is also high.

(3) Tailored – Tailored accounting Software are not available off- the-shelf. It is user-specific software, which is designed and developed by group of professionals on the basis of discussion with the user. It is used by large business organisation with multi-user and geographically scattered locations. It requires the special training. The secrecy and authenticity checks are robust in such software.

Advantages :

• It takes care of the accounting reports and MIS.
• The enterprise may have to engage a software engineer to maintain it, so the problems faced can be solved immediately.
• It require well-trained user to use software therefore they can maximum utilization of the software.
• The secrecy and authenticity checks are robust in such software.

Limitations:

• It gives the misleading results, if the grouping of accounts are not correct.
• The development cost is much higher.
• Training requirement is also very high.

Question 4.
Accounting software is an integral part of the computerised accounting system? Explain. Briefly list the generic constitutions before sourcing an accounting software.
Answer:
When the accounts are maintained with the help of computer, it is called computerised accounting. A computerised accounting system is an accounting system that records and process the accounting data and events and produces the reports as per requirement of the user, according to Generally Accepted Accounting Principles (GAAP).

Every accounting system works under a framework of well-defined principles i.e. accounting principles and in user-defined network for maintenance of records and generation of reports. The framework of storage and processing of data in computerised accounting system is called the operating environment.

Operating environment of computerised accounting system consists of hardware and software of the computer system. Hardware and software of computer system are both dependent on each other. The type of software determines the structure of hardware whereas selection of hardware depends upon the type and number of user, size of the organisation etc.

In small business where the number and variety, of transactions are small, a personal computer with standard software may be perfect. But in large organisation, some powerful computer system with sophisticated software is needed to maintain the accounting data. For this purpose multi-user system such as Unix, Linux etc. are used.

So, it is clear from the above discussion that computerised accounting system cannot do anything without the proper software. Hardware becomes idle without the software. It is the software which makes them run. It is the software which perform recording, classifying, storing and summarising of accounting data and generates reports according to the requirement of the user. So’, we can say that accounting software is an integral part of the computerised accounting system.

Today, there are number of software packages available in market. Since the application in the field of accounting are standard, difference is in the number of features provided by an individual package. It is the people, who are responsible for accounting not the computer, so before acquiring the accounting software it is very important to analyses the expertise level of the people who would use it.

Generic consideration before sourcing an accounting software :
(1) The cost of installation and maintenance-A simple cost benefit analysis is done before sourcing an accounting software. The cost of acquiring installation, hardware requirement and its maintenance are the factors which must be considered before sourcing any software.

(2) Flexibility Flexibility of software is an important consideration before sourcing. Software should be easily upgraded and modified, user should be able to run the software on variety of platforms e.g. Window 98/XP etc.

(3) Size of organisation- The choice of software depends upon the size and volume of transaction of the organisation. For siriall organisation, single user operated software is opted. But for a large and geographically scattered organisation multi-user software with complex networks are required.

(4) Adaptability arid training needs – Accounting software should be easy to understand and adaptable. It should not require extensive training.

(5) Utilities/MlS reports – The degree of use and utility of MIS reports also determine the acquisition of software.

(6) Level of secrecy – Security features is another consideration before sourcing the software. The level of secrecy should be high to protect system from unauthorised accessing.

(7) Exporting/Importing data facility – Sometimes, transfer of data or information are also considered before acquiring the software.

(8) Vendor reputation and capability – Vendor reputation and capability to handle software, in software business, after sale service etc. are also considered before sourcing the accounting software.

Question 5.
‘Computerised Accounting Systems are best form of accounting system.’ Do you agree? Comment.
Answer:
‘Computerised Accounting Systems are best form of accounting system.’ I am very much agree with this statement. Computers have increased the efficiency of accounting departments.

The work which was previously done by number of people is done by computer very fast and accurately. Computer has an inbuilt system of making calculation, collecting and processing accounting data and presenting the results in the form of reports to the management for decision-making purpose.

The computerised accounting system is based on the concept of database management system. It does not involves the process of creating and maintaining journal, ledgers etc. which are necessary in the manual accounting system.

A computerised accounting system comprises of the following main features

• On screen input and printout of invoices
• Updating the ledger
• Recording invoices ‘
• Recording bank receipts
• Making payments to suppliers and for expenses
• Automatic updation of ledger
• Automatic adjustment of stock records
• Provide up-to-date reports.

It has the following advantages :

• Saving time
• Saving money
• Being accurate.

In the area of accounting, there is lot of monotonous work, which is required to be done manually. For example, making entries into journal, updating the ledger, writing day book, preparing vouchers etc. Now all these repetitive activities are performed by the computer. Once the data relating to particular transaction is keyed in, the rest of the posting in the appropriate accounts and books is done by the system itself. From the same data voucher are generated.

Computerised accounting system eliminates the substantial manual efforts involved in posting entries in various books of accounts. It provides any information with ease and greater speed. This system provides automatic updation of books of accounts, automatic reconciliation and saves the storage space. All these benefits have made computerised accounting system the best form of accounting system.