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ICT in costing and management accounting

Edexcel IAL Accounting · WAC12 Corporate and Management Accounting

Almost all accounting is now done with computers. WAC12 asks how ICT is used for costing and management information, and for a balanced evaluation of its advantages and disadvantages, applied to the business in the question.

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Uses of ICT

Spreadsheets: budgets and cash budgets, flexible budgets, break-even charts, variance analysis and NPV tables. Formulas recalculate instantly, so managers can test 'what if' scenarios (price changes, cost rises) and produce charts.
Accounting software: sales invoices, receivables ledgers and lists of debtors (aged analysis), purchases ledgers, payroll (calculating pay and deductions), tax returns, and producing financial statements.
Electronic point of sale (EPOS): barcode scanning records each sale, updates inventory records in real time, triggers automatic reordering at reorder levels, and provides sales analysis by product, time and branch.

Specific software packages are not examined.

Advantages and disadvantages

Aspect	Advantages	Disadvantages
Audit trail	Every entry is logged with user, date and time, making errors and fraud easier to trace	Electronic records can be altered or deleted by anyone with access unless controls (passwords, access levels) are strong
Financial	Fewer staff hours; faster information; fewer errors and their costs; better cash control	Cost of hardware, software licences, upgrades, maintenance and training; possible redundancy costs
Technical	Speed, accuracy of calculations, large volumes processed, remote access, integration (EPOS updates inventory and accounts)	Breakdowns and power cuts, viruses and cyber attacks, data loss without backups, compatibility problems
Human	Staff freed from routine work for analysis; better information for decisions	Staff resistance or fear of change, training needs, de-skilling, 'garbage in, garbage out' input errors, health issues from screen work

Writing an evaluation

Examiners report that generic ICT answers score poorly. Apply every point to the business: for a bakery, EPOS could track sales of each product by hour and reduce waste of perishable goods; payroll software could handle shift workers' overtime. Then weigh the case for against the case against and conclude.

Worked example

A small chain of three bakeries is considering installing EPOS tills linked to accounting software. Give one advantage and one disadvantage, applied to the business.

Advantage: real-time sales and inventory data for each shop shows which products sell when, so the bakeries can bake the right quantities and reduce waste of perishable goods.
Disadvantage: the cost of tills, software and staff training is significant for a small business, and a system failure on a busy morning could stop sales.

Answer: A balanced, applied answer weighs better information against cost and reliability

Key idea: ICT supports budgeting (spreadsheets), invoicing, receivables, payroll and tax (software) and inventory control (EPOS). Evaluate with audit trail, financial, technical and human points, applied to the business.

Check yourself

Which feature of spreadsheets is most useful when preparing budgets?
- They print faster than other software
- Formulas recalculate automatically, allowing 'what if' analysis
- They cannot be changed once entered
- They replace the need for a budget committee
Show answer
Formulas recalculate automatically, allowing 'what if' analysis. Changing one input updates the whole budget instantly.
How does EPOS help inventory control?
- It counts physical inventory at the year end
- It values inventory using marginal costing
- It prevents all theft
- Each sale updates inventory records in real time and can trigger reorders
Show answer
Each sale updates inventory records in real time and can trigger reorders. Barcode scanning reduces inventory records as items are sold.
What is an audit trail in a computerised accounting system?
- A list of the company's auditors
- A record of who entered or changed each transaction and when
- A backup copy of the software
- The route taken by delivery vans
Show answer
A record of who entered or changed each transaction and when. It lets entries be traced back to their source and user.
What does 'garbage in, garbage out' warn about?
- Old computers must be recycled
- Software deletes unused data
- Wrong data input produces wrong output, however good the software
- Printers waste paper
Show answer
Wrong data input produces wrong output, however good the software. Computers process inaccurate data just as quickly.
Give two technical disadvantages of using ICT in accounting.
Show answer
Systems can break down or suffer power cuts, stopping work, and data can be lost or stolen through viruses, hacking or cyber attacks if it is not backed up and protected.. Technical risks include breakdowns and data security threats.
Explain one human disadvantage of introducing a new computerised accounting system.
Show answer
Staff may resist the change or fear losing their jobs, which lowers morale, and they need training, which takes time and costs money.. Human aspects include resistance, morale, job losses and training needs.

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Last updated 8 November 2026. Spotted a mistake? Tell us.