IT: A Revolution in Accounting

Accounting is the language of business i.e. it facilitates the communication of information of an entity to its users. Development in information technology has considerably enhanced accounting systems and altered economic life. Computers and other technologies have increased office productivity and enabled the rapid exchange of documents, facts and figures with remote partners. An information system is a set of unified subsystems that work jointly to collect, process, store, transform, and dispense information for planning, decision making and control.

Accounting information system is an instrument which was incorporated in the field of Information and Technology systems. It is responsible in producing reliable economic and financial information needed for judgments. There are several designs of the system for they must consider factors that influence the way in which information is gathered and reported. The design of an AIS depends on various factors such as: size of business, volume of data and the purpose of data for its users.


Cost Reduction

Information technology can significantly reduce accounting costs. Unnecessary tasks can be centralized in one location through the use of information technology setup. Economic efficiency can be achieved by switching from high-cost manual functions into an online environment. Companies can also offer email support for customers that may have a lower cost than a live customer support call. Moreover, as all the data entry is done in the systems it therefore reduces the paper usage thus affecting the handling costs.

Accounting Applications

Accounting software is an application that records and procedures accounting dealings within functional components such as accounts payable, accounts receivable, payroll, and trial balance. These days, simple accounting software can be acquired online. These programs are used for organization and centralization of data. Some softwares used in the accounting processes such as :

  • Audit software is used by auditors in the auditing process.
  • Word processing softwares are used for preparing reports, bills and financial statements.
  • Excel and SPSS are used for computations and presented to the management by graphical representations at the end of the period.
  • Intercompany exchange of computer-processed business information which is also known as Electronic data Interchange is also an added utility derived from Accounting Information Systems. There are human intermediaries present to approve transactions in a pure EDI environment.


Information technology is used extensively in accounting security. The use of passwords provides a strong control in accessing confidential data about the entity. The use of paper work can be reduced and instead the information can be fed in the computers, that makes it safer and prevents any unauthorized use. Moreover the information fed in the computers can also be tracked by using security softwares of the business organization in case the desktops of laptops are misplaced.


In the accounting system, the things that increase efficiency are the modernized work flow systems, and shared work. This allows the employees to process a better level of work in a shorter time period. Information technology systems can be used in computerizing routine tasks in order to make data analysis easier to perform and store data in a manner that can easily be retrieved for future use.

World Wide Web

The World Wide Web provides vast sources of information that can be used by in the accounting area. Through this, documents can be shared, research can be conducted and taxes can be filed-all online. Connection to the Internet can be wireless and simple. Internet helps in the payment procedures of customers through real-time connection of their credit card with their respective banks. Barcodes are used for automatically updating the inventory records.

Increased productivity

Information technology can be used to make new and improved products and scattering them in various markets. Costs can be reduced by adopting information technology solutions in business. This can increase productivity and help the businesses gain a competitive edge.

Improved reporting

Use of IT in business increases the speed of operations and makes the recording more accurate. This further makes the generation of reports easier and their timely presentations to the management. It has been observed that most companies find that computers greatly simplify the tasks, enabling managers and other employees to get financial reports exactly when they want them.


Information technology advancements have immensely assisted the accounting systems of business entities. Many transactions are simplified thus creating well-organized operations.  Information technology innovations made effective and efficient flow information that enhances managerial decision-making, thereby enhancing managerial decision-making and increasing the firm’s ability to achieve corporate and business strategy objectives.

However, complete reliance of computer systems can also be hazardous for business and we must consider the possibility that the system might be ineffective sometimes. Although information technology, computers have improved the accounting processes but computers cannot replace the role of humans in the accounting systems.

This Article is Written by:


Ms. Pallavi Ahuja
Assistant Professor
Management Department
JIMS Kalkaji
(One of the Best PGDM Colleges in Delhi)

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