The following is an excerpt from a telephone conversation between Gail Richie, P
ID: 2424768 • Letter: T
Question
The following is an excerpt from a telephone conversation between Gail Richie, President of Flanders Supplies Co., and Gary Weir, owner of On-Time Employment Co.
Gail: Gary, you're going to have to do a better job of finding me a new computer programmer. That last guy was great at programming, but he had no common sense.
Gary: What do you mean? The guy had a master's degree with straight A's.
Gail: Yes, well, last month he developed a new financial reporting system. He said we could do away with manually preparing a work sheet and financial statement. The computer would automatically generate our financial statements with "a push of a button.''
Gary: So what's the big deal? Sounds to me like it would save you time and effort.
Gail: Right! The balance sheet showed a minus for supplies!
Gary: Minus supplies? How can that be?
Gail: That's what I asked.
Gary: So, what did he say?
Gail: Well, after he checked the program, he said that it must be right. The minuses were greater than the pluses…
Gary: Didn't he know that supplies can't have a credit balance—it must have a debit balance?
Gail: He asked me what a debit and credit were.
Gary. I see your point.
Comment on (a) the desirability of computerizing Flanders Supplies financial reporting system, (b) the elimination of the work sheet in a computerized accounting system, and (c) the computer programmer's lack of accounting knowledge.
Explanation / Answer
a) It is certainly more useful and desirable to have a computerized sytem for data entry than manula sysytem. As manual system is prone to frequent errors than computerized sysytem. but in order to have a error free computerized system it must have all the modules and accounting treatment of each transaction in a right way otherwise it wiould give wrong results. So according to the need of the organization the software in computerised system must be made.It can be made robust which suits the need of the organization. If the program is prepared in a right manner it would give results very fast and accurate therby decreasing time and effort and cost.
b) Intially the work sheet should not be eliminated because we dont know that the result shown by new computerized su=ystem is correct or not as it is used for the first time, so there may be erroer in some module or program thereby givig wrong data. After making trials and error when the result matcj=h the old system followed than the work sheet can be eliminated slowly from the system.
c) Accounting knowledge is must toget the correct financial figures of the organization. if the person doesnt know what has to be debited or credited the syytem can create blunders, as have happened in the above mentioned case. As he did not have accounting knowledge so he made wrong entries in the system, or the software had some wrong programme thereby making the supplies balance negative. So, accounting knowledge is really important so inle=y than the financial statements and proper debit credit entry could be understood.
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