Essay
Unit 8 D1
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Apologies for the late upload and for all my units I got Distinctions.
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In this task I will analyse the circumstances under which a business would adopt acomputerised accounting system instead of manual one.
Number, variety of transactions and size of the business
Large business have number of activities taking place within and out of the business
and have a number of transactions taking place for example paying suppliers,
electricity, wages, shareholders and maintaining stores etc. All these transaction
need to be recorded so that the business can make budget to ensure that they don't
spent unnecessary money.
Cost of computer system
Cost of computer system compared to how much profit the business making. For
business that are making good amount of profit and are doing well, using
computerised accounting system to prepare their financial statements will help
business to budget more accurately as the estimation will be valid and there will be
less errors in the calculations of the financial documents. However, there are
circumstances under which the business can use the computerised accounting
system.
Software
If First Fashion is making a profit of £60000 annually after paying all expenses of the
business, they can buy professional accounting software that costs £5000. This will
be very helpful for First Fashion as it will help them to create financial documents.
This will not be expensive for business as they making a lot of profit. This will help
business to record data accurately as there will be less errors comparing to manual
system and keep it secure by backing it up.
Training
First Fashion will have to train their employees to be able to use the software to
record data. This means they will have to spent money to provide training to their
staff. They can recruit staff that are trained and can use software but will have to pay
high wages as they have skills to use the software and experience. This way
business expenses will increase.
Maintenance
Maintaining the accounting software can be costly for First Fashion that doesn’t
make enough profit. First Fashion will have to recruit employee that has excellent IT
skills as this will help business to reduce cost because that employee can fix the
problems rather than business hiring another business to solve their problems.
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