Aspirant Academy

Society, Management and Accounting

Predicted Questions with Model Answers

Computerized Accounting: Meaning, Features, Software Packages & ERP

Paper I · Unit 3 Section 9 of 11 0 PYQs 20 min
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Predicted Questions with Model Answers

Q1 (5-mark, 50 words): What is computerized accounting? Explain its advantages over manual accounting.

Model Answer (50 words):
Computerized accounting uses hardware and software to record, classify, summarise, and report financial transactions automatically, applying double-entry principles. Advantages over manual accounting: (i) Speed — thousands of transactions processed instantly; (ii) Accuracy — eliminates arithmetic errors; (iii) Real-time reporting — P&L and Balance Sheet generated instantly; (iv) Audit trail — timestamped, traceable entries; (v) Multi-user access — simultaneous network operations.

Q2 (5-mark, 50 words): Name any four popular accounting software packages used in India. Write two key features of each.

Model Answer (50 words):
(i) Tally Prime — GST-compliant (GSTR-1, GSTR-3B auto-generation), integrated inventory management; (ii) SAP — full ERP integration across accounting, HR, procurement; global leader for large enterprises; (iii) QuickBooks — cloud-first, simple UI for small businesses; (iv) PFMS (Public Financial Management System) — tracks Central Government fund flows, integrated with Aadhaar and DBT.

Q3 (5-mark, 50 words): What is ERP? How does it differ from standalone accounting software?

Model Answer (50 words):
ERP (Enterprise Resource Planning) integrates all business functions — accounting, HR, procurement, manufacturing, sales — into a single shared database, enabling real-time information flow across departments. Standalone accounting software (e.g., Tally) covers only accounting and inventory. ERP (SAP, Oracle) suits large enterprises needing cross-functional integration; standalone software suits SMEs due to lower cost and simpler implementation.

Q4 (5-mark, 50 words): What is cloud accounting? Explain its benefits and risks.

Model Answer (50 words):
Cloud accounting delivers software via the internet (SaaS model) — no local installation, data stored on remote servers. Benefits: (i) anytime-anywhere access; (ii) automatic updates; (iii) real-time collaboration; (iv) no hardware investment; (v) automatic backup. Risks: (i) internet dependency; (ii) data security concerns; (iii) vendor lock-in; (iv) data sovereignty issues when servers are located abroad.

Q5 (5-mark, 50 words): What are Computer-Assisted Audit Techniques (CAATs)? Name any three with brief explanation.

Model Answer (50 words):
CAATs are tools used by auditors to examine and analyse computerized accounting data. Three techniques: (i) Audit Software (ACL/IDEA) — extracts and analyses large data sets to identify duplicates or unusual patterns; (ii) Test Data Method — auditor inputs dummy transactions to verify system controls; (iii) Parallel Simulation — re-processes actual data using auditor's program and compares outputs.

Q6 (5-mark, 50 words): Explain the role of PFMS in government financial management.

Model Answer (50 words):
PFMS (Public Financial Management System), managed by the Controller General of Accounts (CGA), Ministry of Finance, is India's government ERP for tracking fund flows from Union Government through state treasuries to ultimate beneficiaries. Integrated with Aadhaar and bank accounts, it ensures real-time monitoring of Central Sector and Centrally Sponsored Scheme expenditure, reducing leakage and enabling Direct Benefit Transfer (DBT).