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Video Synopsis:
COMPUTERS IN ACCOUNTING
Accounting started in ancient times with tally sticks — people recording amounts by cutting gashes in sticks. But the growth in commerce called for more sophisticated systems. In Italy, in the 1400s, Luca Pacioli invented double entry bookkeeping. The basic idea of double entry booking — recording everything twice remains with us today as an underlying accounting principle. But now computers do most of the routine work.
Using three case studies: a small business, the Bill Brookman Theatre Company, the retail chain Clinton Cards and the massive Arcadia Group company, presenter Dave Nellist explains in simple and amusing terms how computerised accounting systems work. The starting point is a system of three ledgers: the sales, purchase and nominal.
The sales ledger:
This is basically a record of what the company has sold. A critical document is the invoice a record of what’s owed to the company and a request for payment. Invoices are posted to the customer but also "posted" to the sales ledger. Customers are sent statement to remind them what they owe.
The purchase ledger:
This is a record of everything the company has bought. Details from suppliers’ invoices are input into the purchase ledger.
The nominal ledger:
This is a summary of the information from the sales and purchase and ledgers but includes information on all other income and expenditure. For example, wages and interest on money held in deposit in the bank. The nominal ledger provides a breakdown of expenditure and income the company needs to keep tabs, and so is an important source of management information.
The trial balance:
At the heart of account is the need to check that the figures add up. To do this the accounts person does a trial balance. Trying to do this manually is a huge chore — computerisation makes it much easier.
VAT:
Another thing a computerised system helps with is VAT — value added tax. The computer now calculates this tax on most goods and services, which businesses have to collect for the government, for you.
Payroll:
Making sure everyone is paid their salary or wages regularly is another important function which computer systems have been used to automate.
What computers can’t do:
But computers have their limitations. They’re much better at handling repetitive tasks. When companies want to do one-off tasks or take on new projects, they’re less useful. And while they can be a useful source of information, they can’t make decisions. The human element remains essential.
And, as presenter Dave Nellist discovers, another thing a computer can’t do is tell you the meaning of life!
Running time: 25 mins approx (Produced in 2002)
"Overall a very good film for both beginners and advanced students. It would be useful for many different courses including book-keeping, accounting and HND information systems, as well as GCSE and other business courses. A good basic introduction to accounts. The ledgers are very well explained.
It's a good film for confidence building for beginners in the subject. Definitely worth buying. Very clear points. I liked the way points were inter-linked to each other.
Well paced and refreshing in comparison to Open University film on the same subject.
The presenter Dave - I liked him as he seemed like normal human being (!), bouncy personality. I liked all the case-studies, good choices for the teenage audience."
Lawrence Britt, Business School,
City College Norwich
Video Summary: Explains accounting in different types of organisation.