Accounting cycle with information technology

The accounting cycle is the mechanism where the stages of accounting flow and direction are executed , usually it start with the occurrence of the (historical) financial event, passing through the first recording of the financial event, then the posting to the ledger, reaching the tab on the trial balance and then showing the results. We can summarize the entire accounting cycle. Whatever the tool used (notebook / electronic), in implementing the stages of this cycle programmatically, through accounting programs prepared in different programming languages such as Visual Basic / C # / C ++ / Python When using one of these languages, whatever the language, is performed to convert the accounting cycle to code called Modules  is performed by Computer by specifying the functions and equations and paths tab and migration prepared programmatically appear at the end of an accountant (user) In the form of windows, these windows contain input boxes such as Textbox / Combo Box and Command Button, so it is necessary to choose the most flexible and efficient mechanism in line with the accounting theory of assumptions, principles, rules and standards.

The concept of the accounting cycle and information technology

The word "cycle" means the Starting point down to end point. Therefore, the accounting cycle means the beginning of the accounting system to its end. The starting point of the accounting cycle is the occurrence of the financial process through the various operations of the financial process (registration / posting / balancing / tabulation / settlement) Up to the end point, which is the presentation of results, information and financial statements, As for information technology (I.T), it is the design, development and support of systems that depend on information systems that depend on automatic accounts and electronic software packages, which work to store, process, protect and retrieve data

operating mechanism of the accounting system

1- The existence of opening balances from the previous year represented in the assets, liabilities and equity elements of all their classifications.

2- Conducting a group of debit and credit financial movements (daily entries) which the balance is assumed and which works to increase and decrease these balances, which leads to an increase and decrease in assets, liabilities and property rights through comprehensive financial movements on revenue, investment and financing operations.

3- Conducting period adjustments and determining what is related to the period and what is not related to the period in the components of revenues and expenditures, as well as settlements related to the elements of assets and liabilities.

4- The result of these balances and movements of two main groups of results

First: It is the results of business and operating and revenue activities, which is known as the income statement or the profit or loss statement.

Second: the results of the change in these balances, which is known as the financial position. 

Initial recording of the opening balances 

Companies and economic organizations face difficulty in the total transition, whether from method to method, or from system to system, in the first case, which is the transition from a method to a method intended to move from a specific method by which the accounting cycle is implemented, such as moving from using the book method to using electronic systems. Or, moving from using electronic accounting (accounting excel) to the software method, Or moving from one system to another, in the event of using a specific program and moving to another, and the difficulty in moving is to check the book balances of the components of the financial position, given the absence of a stable and reliable system before, for example in the case of registration on Excel

The registration depends mainly on the skill of the accountant in design, as well as the availability of accounting techniques in the registration, Than it may result in the emergence of the results of sound on the accounting level, it may be these results sound in some of them and intact in others, and are common in practical life this problem because of the multiple files, Excel used, other than the problems caused by changing the accounts staff and Each of them has its own way of designing and recording, and these serious defects have disappeared with the use of information technology in accounting, due to the presence of many advantages in accounting programs, perhaps the most important of which is the security of information, narrowing the paths of error in registration, direction and deportation, showing and discovering errors as soon as they occur, and may be prevented. Some errors proactively such as errors related to balance, extreme difficulty in transferring the program from one device to another device.

Chart of accounts

Information technology is characterized by great flexibility in preparing the accounting guide for many levels that may reach infinite levels of branching out to parents. The parent account, for example, fixed assets, has a son branching out from it like cars, then Cairo branch cars, and then branching out to sale and distribution cars, transport cars and internal transport cars and external transport vehicles, and under each item these items an account is branched out for each car, and each account for these cars may be branched into other sub-accounts that include some of the details that make up the original, this important feature is not available in all other methods, whether book or excel, due to the limited possibility of branching or (afforestation) in these methods compared to using large databases and programming languages, and the number of parents and children must be determined in advance in these methods, on the contrary, when Using databases that allow an unlimited number of branches and levels

General windows and sub-windows  

Accounting software provides an important advantage in the registration process, such as preparing special screens (subsidiary) for the specialized departments, such as the Treasury Department, the Customer Accounts Department, the Payments Department, or the Human Resources Department ... etc., that are automatically linked to the general accounts without the need to repeat the registration in the sub-accounts. And general accounts, for example in the Treasury department. If a cash receipt voucher is issued from a customer, the process is recorded with a special screen for clients' collections, and as soon as the bond is registered on the system, the value is increased on the account of the public treasury and the subsidiary treasury, and the value is reduced from the customer’s balance and the total customer accounts, and whenever there is flexibility and accuracy in linking relationships and accounts whenever possible, various reports and analyzes are obtained and in many ways of presentation

Subsequent printing of the internal documentary cycle

One of the advanced features in the use of software systems is the ability to print the internal document indicating the financial process after entering it later, and this feature achieves a great deal of control over the integrity of the entry, for example when entering a purchase invoice for the system through the supplier's invoice and the receipt record, the prices, quantities and items are recorded on The accounting system, then the receipt of goods received permission is printed, and after the printed document is matched and matched with the entered bills, matching necessarily means the integrity of the entry, registration and posting.

Flexibility of accounting reports 

The electronic (software) systems allow great flexibility in the formal and fundamental modification of the financial reports, according to the needs of the public administration or financial management, or according to the continuous modifications of accounting standards such as amendments related to the preparation and presentation of financial statements .And whenever there is flexibility in modification, the system used is renewable and keeps pace with the changes resulting from continuous updates in accounting standards and management requirements.

Accounting closings and periods 

The advantage of electronic (software) accounting systems as one rule that includes multiple separate, continuous periods, and it also has features that are not available in other methods of implementing the accounting cycle, in other systems each financial period is separate from the other depending on the external transfer of the balances of the elapsed financial period, In the new financial period, this process needs many procedures, unlike electronic systems that perform this process automatically and at the same time, it is possible to return to previous periods with ease, and the closing process can be done temporarily, until the external or internal review of the accounts, then make the final transfer, flexibly and easily.

Finally, information technology has positively affected the role of the accountant, but it did not eliminate or reduce the role of accountants. The electronic systems helped the accountant complete his work faster, more accurately, more flexibly and more reliably and also positively affected the owners of capital in preserving the organization’s resources and controlling them