Definitions of Accounting Computer-based Accounting Benefits of Computer Accounting

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CHAPTER II THE LITERATURE REVIEW

A. Literature Review

1. Theory of Accounting

a. Definitions of Accounting

According to Weygant 2009: 4-5, accounting is defined as an information which identifies, records, and communicates economic phenomena to those concerned. Horngren 2006: 4 defines accounting as information system measuring business activity, processing information into financial statement, and communicate the result to the policy makers.

b. Computer-based Accounting

The rapid development of knowledge and computer technology both in case of software and hardware gives more chances and easiness to the businessmen for being able to manage accounting information by using computer software. The computer software which is more sophisticated and easy to use is a chance to apply computer-based accounting system so that the information acquired and produced by businessmen will be useful, able to support business activity, and able to give added value for all parties concerned. According to Bambang and Muhammad 1999: 7 computer, by its nature, which is very simple, shopisticated, and complex as in the recent era, obviously and significantly gives a lot of support to business process and activity. 8

c. Benefits of Computer Accounting

Bambang and Muhammad 1999: 7-8 suggest that computer-based accounting have benefits such as. 1 Quickness Computer system can produce information which is quicker than manual system does since it can work simultaneously with high speed and accuracy. 2 Result Volume Because of fast working process, transaction volume which can be managed is increased and so does result volume. 3 Error Prevention Computer has degree of accuracy which is higher than human have and its system is also completed by various ways of preventing error. 4 Authomatic Posting Posting in accounting system using computer will be done authomatically. This is effective to reduce bookkeeping activity and highly accurate. 5 Authomatic Statement Writing In computer-based accounting system, the statements will be done authomatically. Because computer enables to carry out journal process, posting, financial statement writing, and other financial statements. 9 6 Authomatic Document Printing Computer system can deal with various documents used in a company such as invoice, statement of monthly credit, paycheck, and employees’ earning statements.

d. Anates Version 4.09