EXECUTIVE SUMMARY

JSW Steel Coated Products Ltd. is a Public company. The project has been undertaken on the
topic HOW ACCOUNTING AND ERP BENEFICIAL TO THE COPANY. The
principal aim of this study is to investigate the accounting benefits that the adoption of an
ERP system by companies in India may entail in relation to ERP user satisfaction. This study
explored the impact that the ERP system has had on accounting information and practice.
This study also examined whether differences exist between accountants and IT professionals
concerning how each group assesses ERP accounting benefits and ERP user satisfaction.
Furthermore, this research identifies factors related to accounting which affect the level of
ERP user satisfaction. Implications of these results for practice and research are provided.
The findings of this study will be of value to any companies that are considering the inclusion
of their accounting techniques and operations in an ERP system.

COMPANYS PROFILE

JSW Steel is Indias leading private sector steel producer and among the worlds most
illustrious steel companies.
JSW Steel is around $9 billion global conglomerate spread over six locations in India and a
footprint that extends to the US, South America and Africa.
The flagship company of around $11 billion JSW Group, JSW Steel is testament to decades
of experience and a dynamic culture that have culminated in the company becoming the
leading provider of specialized steels in India.
JSW Steels business vision is centered on sustainability. We realize that only by creating a
sustainable future can we pave the way for our goal of a self-reliant India. This belief has
always stood us in good stead. With a conviction in our values, we have grown from a single
steel mill in 1982 to the large operations that define us today.
JSW Steel is a pioneer in the use of innovative technology that keeps us ahead of the curve.
Not only do we offer the widest product portfolio in India, we also further leverage our
capability to customize offerings to match customer expectations.
Our strategy of always staying on the leading edge of technical advancement has led to
partnerships with global sector leaders such as JFE Steel, Marubeni Itochu Steel, Praxair and
Sever field Rowan Plc. This technological edge has helped our plants rank among the lowestcost steel producers in the world.
The strong focus on innovation and R&D has led to JSW Steel being recognized worldwide
as a purveyor of high-end, value-added steel. Nearly 40 percent of our products today are
high value steels; we intend to take this figure up to 50 percent. Nearly one fifth of our
products are exported and we are Indias largest exporter of coated products with a presence
in over 100 countries.
2

Our strategic approach to growth has driven the Companys forward and backward
integration initiatives. Our steel plants in Karnataka, Tamil Nadu and Maharashtra have a
combined installed capacity of 14.3 million tons per annum. With the objective of touching
40 million tons in the next decade, we are expanding capacities at our existing sites and
setting up plants in new locations. On the anvil, are two 10 million tone Greenfield facilities
in West Bengal and Jharkhand.
At JSW, sustainability is the touchstone on which we have evolved our operational processes.
Our systems for governance, manufacturing, supply chain management, human resource
management, community engagement, mitigation of our carbon footprint and customer
engagement, among others, are benchmarked against global best-in-class standards.
Our deeply held beliefs on doing business the sustainable way have led to strong partnerships
among the communities where we operate. The success of our models for land acquisition
and community engagement make them torchbearers for Indian industry. The canopy of our
CSR (corporate social responsibility) initiative covers micro-level engagements as well as
macro development programs that leave a measurable positive impact in every location where
we have a presence.

History
The JSW Groups foray into steel manufacturing began in 1982, when it set up the Jindal Iron
and Steel Company with its first steel plant at Vasind near Mumbai. The next two decades
saw significant expansion and several acquisitions, following the merger of Jindal Iron and
Steel Co (JISCO) and Jindal Vijayanagar Steel Ltd (JVSL) in 2005. Today JSW Steel has
plants in six locations in India Vijayanagar in Karnataka, Salem in Tamil Nadu, and
Tarapur, Vasind, Kalmeshwar and Dolvi in Maharashtra.
Our global operations include a plate and pipe mill in the US. In order to securitise resources,
the company has acquired mining assets in Chile, USA and Mozambique.

JSW at Tarapur

Type: Steel Mill

Area: Maharashtra
Products: Cold rolled, color coated and galvanized steel.
Owners: JSW Steel Limited
Shareholders: JSW Group
The Tarapur plant marks one of the first milestones for the JSW Steel. This plant was
originally inaugurated on 11th May 1974 by Hon. Vasant Rao Naik. The than Chief Minister
of Maharastra state, and the same was acquired by Late Shri O. P. Jindal on 9th November
1982, from Piramal Steel Limited and was renamed as Jindal Iron and Steel Company. The
Company was later merged with Jindal Vijayanagar Steel to form JSW Steel.
The plant offers coated products catering to several sectors. Tarapur plant specialised in
galvanizing, Galvalume and colour coated steels. It is Indias largest producer and exporter of
Coated Products.
The Tarapur plant has Five (5) Cold rolling mills, Five (5) Coated strip Divisions, which
includes Two (2) Dual pot Galvanising cum Galvalume Lines, Two (2) Colour Coated lines &
a 30 MW Captive Power Plant.
The plants total capacity is 0.75 million tones per annum (including ongoing projects). It
sources coils from the JSW Steel Vijayanagar & Dolvi plant to manufacture value-added
branded steel products.

UNIQUE FEATURES

The Tarapur plant is specialized for the Ultra Thin Coated Products.
The Tarapur plant features two dual product lines for galvanized cum Galvalume with
a coating capacity of 0.45 MTPA.
It also has 30 MW Captive Power Plant (CPP) to meet the power requirement of both
Tarapur & Vasind plant.
Tarapur has a zero discharge facility having a multi-effect evaporator system for
effluent treatment.
It has a unique service center facility to meet the customized requirement of various
segment like Export, OEM, Retail for their cut sheet/ corrugation and profiling requirement
It has also installed rainwater harvesting system to meet its water requirement.

PLANT INFORMATION

The Tarapur palnt features HRS/pickling lines, cold-rolling mills and metal-coating lines. The
plant uses regenerative thermal oxidisation for heat recovery for LPG saving in colour
coating lines.
The unit uses technology from BIEC International Inc, USA, and BlueScope, Australia,
besides equipment from Hatch, Australia (for pot equipment), Spooner, UK (for after-pot
cooling) and Ajax Tocco, USA (for ceramic pot and induction heating).
As part of its move to conserve electrical energy, the Tarapur unit is installing solar power
panels, replacing old DC motors with energy efficient induction motors and installing LED
lights in upcoming plants.

PRODUCTS PORTFOLIO
The Tarapur works produces colour-coated product brands such as
Jindal Vishwas (GI brand)
JSW Vishwas Plus (GALVALUME brand)
JSW Colouron and
JSW Colouron Plus (pre-painted galvanized brands) and
5

 JSW Pragati, a new pre-painted GALVALUME brand.

VISION AND MISSION OF JSW

Vision
Global recognition for quality and efficiency while nurturing nature and society

Mission
Supporting Indias growth in steel domain with speed and innovation

Core value

Transparency
Strive for excellence
Dynamism
Passion for learning

O P JINDAL GROUP

Shri. O P Jindal, an industrialist par excellence under whose aegis the O P Jindal Group grew
from strength to strength. But for the world at large Shri O. P. Jindal was much more than
that. He was a leader of the masses, someone who would often champion the cause of the
poor and downtrodden. He was not just a celebrated politician, but also a great humanitarian
and an avant-garde visionary. His life both as an industrialist and as a social worker left an
indelible mark on this nation. And for us at the O P Jindal group, his life gives us inspiration
to touch new heights.
The Jindal Group is a US$ 18 billion conglomerate, which over the last three decades has
emerged as one of India's most dynamic business organisation. The Jindal Group was
founded in 1952 by steel visionary Shri O. P. Jindal, a first-generation entrepreneur who
started an indigenous single-unit steel plant in Hisar, Haryana.
Over the last 3 decades the Group has grown to be a US$ 15 billion, multi-national and multiproduct steel conglomerate with business interests spanning across mining, power, industrial
gases, port facilities and of course steel making. From mining iron ore and coal, the group
produces sponge iron, ferro alloys and a wide range of hot-rolled and cold-rolled steel
products ranging from HR coils/sheets/plates, hot-rolled structural sections and rails to CR
coils/sheets, high-grade pipes and value added items such as stainless steel, galvanized steel
& coated pipes. It has not only diversified into power generation but also into petroleum,
infrastructure, diamond and high value metals & mineral exploration. Presently the group has
manufacturing outfits across India, US, UK and Indonesia and mining concession in Chile,
Indonesia & Mozambique and marketing representative's offices across the globe.
Growth has been a way of life for the Jindal Group and its motto all along has been 'Growth
with a social conscience.' The group places its commitment to sustainable development, of its
people and the communities in which it operates, at the heart of its strategy and aspires to be
a benchmark in this direction for players in the industry the world over. The group's strength
lies in dynamic and aggressive approach of the leaders of the group. These leaders are none
other than the four sons of Shri O. P. Jindal. Their appetites for growth are enormous and
have a clear vision of being recognized as best in the industry by consolidating its core
strengths. Under their leadership respective companies managed by them as mentioned
hereunder have grown by leaps and bounds.
8

The group has already announced its intention to set up Greenfield steel plants and power
plants in the state of West Bengal, Jharkhand, Chhattisgarh, Odhisa, Rajasthan, Maharashtra
and Karnataka. The group is continuously on the look out for acquiring various Iron ore and
Coal mines, critical inputs for steel making.

COMPANIES OF JINDAL GROUP

Jindal Stainless Ltd.: Jindal Stainless is the largest integrated stainless steel producer in
India and the flagship company of the Jindal Group. It is an ISO: 9001 & ISO: 14001
company. Jindal Stainless Ltd. has plants at Hisar and Vizag and is setting up a Greenfield
integrated Stainless Steel project in Orissa with capacity of 1.6 million tones per annum.
Jindal's plant at Hisar is India's only composite stainless steel plant for the manufacture of
Stainless Steel Slabs, Blooms, Hot rolled and Cold Rolled Coils, 60% of which are exported
worldwide. At Vizag, Jindal has a Ferro Alloy Plant with an installed capacity of 40,000
metric

tones

per
9

annum.

Jindal Steel & Power Ltd: JSPL is one of the leaders in Steel Manufacturing and Power
Generation in India. JSPL is the largest private sector investor in the State of Chhattisgarh
with a total investment commitment of more than Rs. 10,000 crores. It is also setting up a 6
million tonne steel plant in Orissa with an investment of Rs. 13,500 crores and a 6 million
tonne steel plant in Jharkhand with an investment of Rs. 15,000 crores. Jindal Power Limited,
wholly owned subsidiary of JSPL, is setting up a 1000 MW O P Jindal Super Thermal Power
Plant at Raigarh, with an investment of over Rs. 4500 crores. JSPL has also ventured into
exploration and mining of high value minerals and metals, like diamond, precious stones,
gold,

platinum

group

of

minerals,

base

metals,

tar

sands

etc.

JSW Steel Limited: JSW Steel Ltd is a fully integrated steel plant having units across
Karnataka and Maharashtra producing from pellets to colour coated steel. JSW was founded
in1982, when the Jindal Group acquired Piramal Steel Ltd which operated a mini steel mill at
Tarapur in Maharashtra. The Jindals, renamed it as Jindal Iron and Steel Co Ltd (JISCO) now
known as JSW Steel Limited (Downstream). In 1994, to achieve the vision of moving up the
value chain and building a strong, resilient company, JISCO promoted Jindal Vijayanagar
Steel Ltd (JVSL) now known as JSW Steel Limited (Upstream)

10

2. CHART OF ACCOUNTS (COA)

A chart of accounts (COA) is a financial organizational tool that provides a complete listing
of every account in an accounting system. An account is a unique record for each type of
asset, liability, equity, revenue and expense.
A COA, which lists the names of the accounts that a company has identified and made
available for recording transactions in its general ledger, establishes the level of detail tracked
in a record-keeping system. Typically, a COA contains the accounts names, brief descriptions
and identification codes.
In practice, the COA serves as the foundation for a companys financial record keeping
system. It provides a logical structure that facilitates the addition of new accounts and
deletion of old accounts.
Within the COA, accounts will be typically listed in order of their appearance in the financial
statements. Typically, Balance sheet accounts are listed first followed by the income
statement accounts.
BALANCE SHEET ACCOUNTS

Assets
Liabilities
Owner's (Stockholders')
Equity

INCOME STATEMENT
ACCOUNTS

Operating Revenues
Operating Expenses
Non-operating Revenues and
Gains
Non-operating Expenses and
Losses

An important purpose of a COA is to segregate expenditures, revenue, assets and liabilities so

that viewers can quickly get a sense of a companys financial health. A well-designed COA
not only meets the information needs of management, it also helps a business to comply with
11

financial reporting standards. A company has the flexibility to tailor its chart of accounts to
best suit its needs. Within the categories of operating revenues and operating expenses, for
instance, accounts might be further organized by business function and/or by company
divisions.
A chart of accounts will likely be as large and as complex as the company itself. An
international corporation with several divisions may need thousands of accounts, whereas a
small local retailer may need as few as one hundred accounts.

DRAWERS, TITLES, AND ACTIVE ACCOUNTS

12

Accounts are organized hierarchically according to drawers, titles, and active accounts. The
organization of the chart of accounts follows GAAP in which there is a separate drawer for
accounts representing assets, liabilities, equity, revenues, cost of sales, expenses, financing,
and other revenues and expenses (see level 1 in the figure). Within each drawer, you organize
your accounts by level in a logical fashion appropriate to your financial accounting processes.
Drawers are the organizational unit on the top level. You cannot change the predefined
drawers provided with SAP Business One.
Every G/L account is defined as either a title account or an active account. A title account
groups together all of the active accounts below it (see level 2, 3, and 4 in the figure). In
financial reports, a title summarizes all of the balances of each active account below it. Active
accounts contain postings of transactions (see level 4 and 5 in the figure). You can
differentiate titles and active accounts by their text color: titles appear in blue, active accounts
appear in either green or black. Green accounts are control accounts that have been defined as
default G/L accounts for automatic posting of transactions in SAP Business One. Black
accounts are those active accounts that have not been selected in G/L account determination.
For more information, see G/L Account Determination. The number of levels in your chart of
accounts may depend on your localization and common business practices. Some countries
have a legally required number of levels. SAP Business One provides predefined charts of
accounts for individual countries based on local requirements. Discuss with your partner who
predefined chart of accounts to use, and what additions and adjustments are necessary for
your company

3. MEANING OF ENTERPRISE RESOURCE PLANNING

Enterprise resource planning (ERP) is business

management software that allows an organization to
use a system of integrated applications to manage the
business. ERP software integrates all facets of an
operation, including product planning, development,
manufacturing processes, sales and marketing. In order
to understand computer networks better, it would be
helpful to have an overview of the applications
running on the network. ERP or Enterprise Resource
Planning is an important enterprise application that
integrates all the individual departments/functions in a
single software application.
Systems make it easier to track the work-flow ERP
across various departments and reduce the operational costs involved in manually tracking,
and perhaps duplicating data using individual & disparate systems. In this article, let us have
a look at the advantages and disadvantages of implementing ERP (Enterprise Resource
Management) Systems.
Enterprise Resource Planning, for further will be abbreviated as ERP, has now become very
important part in the industrial world and corporation. Automation and integration of all
13

functions of involved in the process of forming business ERP as an information system

capable of facilitate the flow of information between all functions business within the
organization, as well as set relationships with stakeholders. ERP software first appeared on
the market as proprietary and commercial software, because it until now vendors such as
SAP, PeopleSoft and oracle still dominates the ERP software market. But the dominance of
commercial software started deterred from open source software movement gaining in
popularity.
ERP stands for enterprise resource planning, is a software system that aims to serve as a
backbone for your whole business. It integrates key a business and management processes to
provide a sky-level view of much of whats going on in your organization. ERP tracks
company financials, human resource data and all the manufacturing information such as
where you put your inventory and when it needs to taken from the parts warehouse to the
shop floor.
For Process driven companies it would have 'recipe' and 'batch' controls and for project
companies like construction, it would be 'project' control rather than 'shop floor' control. It
can be monolithic or modular, client/server or web based.

14

ADVANTAGES OF ERP (ENTERPRISE RESOURCE

PLANNING) SYSTEM
1. Complete visibility into all the important processes across various departments of an
organization (especially for senior management personnel).
2. Automatic and coherent work-flow from one department / function to another to ensure
smooth transition/ completion of processes.
3. A unified and single reporting system to analyze the statistics/ numbers/ status etc in realtime, across all the functions / departments.
4. Since same software is used across all departments this can avoid individual
departments having to buy and maintain their own software systems.
5. Certain ERP vendors can extend their ERP systems to provide Business Intelligence
functionalities as well.
6. Advanced e-commerce integration is possible with ERP systems that can handle webbased order tracking/ processing.
7. Single Database is implemented on the back-end to store all the information required by
the ERP system and that enables centralized storage / back-up of all enterprise data.
8. ERP systems are more secure as centralized security policies can be applied to them and
all the transactions happening via the ERP systems can be tracked.
9. ERP systems provide visibility and hence enable better/ faster collaboration across all the
departments.
10. ERP systems make it easier for order tracking, inventory tracking, revenue tracking, sales
forecasting and related activities.

15

DISADVANTAGES OF ERP (ENTERPRISE RESOURCE

PLANNING) SYSTEMS

1. The cost of ERP Software,

implementation, etc is too high.

planning,

customization,

configuration,

testing,

2. ERP deployments take 1-3 years to get completed and fully functional.
3. Too little customization may not integrate the ERP system with the business process & too
much customization may slow down the project and make it difficult to upgrade.
4. The cost savings/ payback may not be realized immediately after the ERP implementation
& it is quite difficult to measure the same.
5. The participation of users is very important for successful implementation of ERP
projects So, exhaustive user training and simple user interface might be critical. But ERP
systems are generally difficult to use (and learn).
6. There may be additional indirect costs like new IT infrastructure, upgrading the WAN
links, etc.
7. Migration of existing data to the new ERP systems is always difficult to achieve as with
integrating ERP systems with other stand alone software systems.
8. ERP implementations are difficult to achieve in decentralized organizations with
disparate business processes and systems.
9. Once an ERP system is implemented it becomes a single vendor lock-in for further
upgrades, customizations etc.

16

WHY ERP IS SO IMPORTANT

Enterprise Resource Planning provides many benefits to business such as

1. Enhance productivity, flexibility and customer responsiveness

By integrated core business processes together in one single application, it helps
company maximize the efficiency of business process across the entire
organization. Plant manufacturing can produces product faster. Increase on time
delivery, Increase productivity, Increase ability to forecast demand to supplies,
Increase order capacity, and improve customer service (Customer Relationship
Management (CRM)).

2. Eliminate costs and inefficiencies

Using an ERP system to standardize business processes can dramatically
improve companys operation. ERP enable company to manage relationship with
vendor results in lower cost for purchased items. Better resource management
results in more inventory turns and decrease the level of inefficiencies.

3. Data consistency
Because an ERP system integrates all business management functions, it
decreases level of inconsistency information from different systems. Thus, by
using ERP system, managers can gather correct information and make a right
decision.

4. Extend your business using the Internet

By integrating all business functions together in one system, it increases ability
of a company to use internet as part of the business strategy. Web-enabled
technology allows you to access information, sell product, run business
processes, and communicate with customers and partners at any time and from
anywhere in the world.

17

4. CONCEPTUAL COMPONENTS OF ERP

Before we begin to implement ERP system, we should to understand the high Concept or
ERP model.

The ERP model is consists of four components which are implemented through a
methodology. All four components are
1. The software component is the component that is most visible part and seen as the ERP
Product which is not true. It consists of several modules such as Finance, Human resource,
Supply chain management, supplier relationship management, customer relationship, and
business intelligent.
2. Process Flow is the model that illustrates the way how information flows among the
different modules within an ERP system. By creating this model makes it easier to
understand how ERP work.
3. Customer mindset By implementing ERP system, the old ways for working which user
understand and comfortable with have to be changed and may lead to users resistance.
Employee-raised facts, beliefs, and values are good indicators of what may cause their
resistance to change. For example, some users may say that they have spent many years
doing an excellence job without help from ERP system. This is the value and belief that users
have toward new ERP system. In order to lead ERP implementation to succeed, the company
18

need to eliminate this kind of negative value or belief that users have toward new system. At
Pratt & Whitney Canada, top management not only provide the resource, but they also
formulated a clear vision of goals that they wished to achieve from the project. By doing so,
it helped to guide employee expectations the benefits of new system.
4. Change Management In ERP implementation, Change needs to be managed at
several levels.
4.1 User attitude Resistance to change is a big problem that can lead to project failure. If the
company need to success in implementing new system, users need to be understand what the
new system is and give a commitment to new system. By doing so, a company need to have a
good management plan and implementation.
4.2 Business process changes when new system is implements, the business processes are
also changed (Legacy systems are removed). Thus, a company should have a plan for these
changes.

19

5. PROJECT LIFE CYCLE IN ERP IMPLEMENTATION

In project life cycle, there are four stages that a company should to follow.
1.

Project Concept/Initiation This stage determines the scope of development. If this

stage is not performed well; it is unlikely that the project will be successful in meeting the
businesss needs. The key project controls needed here is an understanding of the business
environment and making sure that all necessary controls are incorporated into the project (By
using BPR (Business Process Reengineering) Any deficiencies should be reported and a

20

recommendation should be made to fix them. Project Manager, Project governance, and core
project team also have been assigned in this stage.
2.

Project Planning in this stage of ERP implementation, Project management includes

finalizing the detailed planning process and requirements (Technology, Hardware, Software,
Data, and Functionality which involves finalizing the project scope, schedule, resource
requirements, quality and risk concerns, plus any organizational (e.g., centralization versus
decentralization) issues. This stage should produce a request for proposal (RFP) to be sent to
potential vendors. When sending out the RFP, project planners should address an evaluative
scheme for comparing and ranking vendor responses such as a weighted scoring approach.
It would include factors each vendor's product are to be evaluated against and their relative
weights. Generally, scoring is completed after all RFP responses have been received.
3.

Project Execution in this stage vendor has been selected and planning proceeds for

swapping software previously used with the new ERP package. The most important issue in
this phase is to ensure project activities are properly executed and controlled. During the
execution phase, the planned solution is implemented to solve the problem specified in the
project's requirements. The execution stage includes the actual implementation of the design
or plan. In software systems, this includes conversion (transfer of data from an old system to
a new system), documentation, and training. Training is also important because it helps users
use the software correctly. The bulk of the project's work and largest capital expenditure is
realized in this stage.
4.

Project Closure The final stage of the ERP implementation project-- closeout/operation

and maintenance-includes carrying out the usual bug fixes, responding to enhancements that
were not included in the original implementation, and preparing a final report. The report
should include a critique of what went right and what went wrong over the life of the project
so that lessons learned may be documented and incorporated into future projects.

21

GUIDELINE FOR ERP IMPLEMENTATIONS IN PROJECT MANAGEMENT

Deciding on project scope - The scope of an ERP project has several components.
The ERP project team must decide which business processes will be included in the
implementation and it should not be changed frequently which will affect other area
and project timeline. The scope should be build to prevent never ending project.
The Right Staff one It is of the major issues with any IT project is the staffing
issue. Good technology staffs, particularly those with deep ERP experience are
extremely hard to find. Since it's difficult to transition ERP team members on and off
projects thus by lower rate of turnover is importance.
Project scheduling It is the project manager should to manage a good time line that
can maximize efficiency of resource.
Monitor Progress - The success criteria should be clearly defined in the procedures,
methods, and techniques that are part of a high quality project control system.
Standards and techniques for measuring the quality of performance expected from the
new system should be defined early, and redefined as needed over the life of the
project.

Three most common mistakes of ERP Implementation

Focusing on Technology There is no evidence anywhere in the history of IT
that software alone will solve a business problem.
Ignoring the importance of requirement definition many companies try to
adopt ERP system which doesnt fit to business requirement which generally
lead to project failure.
Jumping from the Requirement definition to the development phase Most
of projects have to deliver the system in the timeline, thus they may skip some
important implementation steps. For example, Project manager may skip the

22

change manage process which may create users resistance to new system and
lead to project failure.

23

6. MEANING OF ACCOUNTING
Accounting, as an information system is the
process of identifying, measuring and
communicating the economic information of an
organization to its users who need the
information for decision making. It identifies
transactions and events of a specific entity. A
transaction is an exchange in which each
participant receives or sacrifices value (e.g.
purchase of raw material). An event (whether
internal or external) is a happening of
consequence to an entity (e.g. use of raw material
for production). An entity means an economic
unit that performs economic activities. The

primary function of accounting relates to

recording, classification and summary of financial transactions, journalisation,
posting, and preparation of final statements. These facilitate to know operating results
and financial positions. The purpose of this function is to report regularly to the
interested parties by means of financial statements. Thus accounting performs
historical function i.e., attention on the past performance of a business; and this
facilitates decision making programmed for future activities.
Accounting records and financial statements provide financial information which
helps the business in making rational decisions about the steps to be taken in respect
of various aspects of business. Entities such as companies, societies, public trusts are
compulsorily required to maintain accounts as per the law governing their operations
such as the Companies Act, Societies Act, and Public Trust Act etc. Maintenance of
accounts is also compulsory under the Sales Tax Act and Income Tax Act.

DEFINITION OF ACCOUNTING
American Institute of Certified Public Accountants (AICPA) which defines accounting as
the art of recording, classifying and summarizing in a significant manner and in terms of
money, transactions and events, which are, in part at least, of a financial character and
interpreting the results thereof.

24

OBJECTIVE OF ACCOUNTING
Objective of accounting may differ from business to business depending upon their specific
requirements. However, the following are the general objectives of accounting.

i) To keeping systematic record: It is very difficult to remember all the business

transactions that take place. Accounting serves this purpose of record keeping by promptly
recording all the business transactions in the books of account.

ii) To ascertain the results of the operation: Accounting helps in ascertaining result
i.e., profit earned or loss suffered in business during a particular period. For this purpose, a
business entity prepares either a Trading and Profit and Loss account or an Income and
Expenditure account which shows the profit or loss of the business by matching the items of
revenue and expenditure of the same period.

iii) To ascertain the financial position of the business: In addition to profit, a

businessman must know his financial position i.e., availability of cash, position of assets and
liabilities etc. This helps the businessman to know his financial strength. Financial statements
are barometers of health of a business entity.

iv) To portray the liquidity position: Financial reporting should provide information
about how an enterprise obtains and spends cash, about its borrowing and repayment of
borrowing, about its capital transactions, cash dividends and other distributions of resources
by the enterprise to owners and about other factors that may affect an enterprises liquidity
and solvency.

v) To protect business properties: Accounting provides up to date information about

the various assets that the firm possesses and the liabilities the firm owes, so that nobody can
claim a payment which is not due to him.

vi) To facilitate rational decision making: Accounting records and financial

statements provide financial information which help the business in making rational decisions
about the steps to be taken in respect of various aspects of business.

25

TYPES OF ACCOUNTS
The business transactions can be grouped under three types of accounts:
Personal accounts
Real accounts
Nominal accounts
PERSONAL ACCOUNTS
Personal accounts are the accounts of persons or firms that the business deals with. These are
primarily of three types:
Natural persons account: These are accounts of real persons who transact with the business
in various capacities. The proprietors account and the accounts of customers are some
examples of natural persons accounts
Artificial persons accounts: These are accounts of firms and entities that transact with the
business. The accounts of a limited companies or banks that are not real persons are the
example of artificial persons accounts.
Representative personal account: These are accounts that represent certain person or
persons. If a business has not paid the rent of a number of shops for the past two months then
all landlords are creditors of the business and the amount due to them is recorded under a
common head called Rent Outstanding Account. This is a representative personal account.
Other examples of representative personal accounts are Interest Outstanding and Interest Paid
in Advance accounts.

REAL ACCOUNTS
Real accounts are the accounts of the properties, assets and possessions of a business. These
can be of two typesTangible Real accounts: These are accounts of things that can be touched, measured, sold or
purchase. Examples of tangible real accounts are land account, furniture account and cash
account.
Intangible Real accounts: These are accounts of things that cannot be touched in the
physical sense but can be measured in terms of money value. Trademark or patent rights are
examples of intangible real accounts.

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NOMINAL ACCOUNT

Nominal accounts are the accounts of each head of expense or income of a business. They are
used to define the nature of the transactions; hence, they are also called fictitious accounts.
Without nominal accounts, it is very difficult for the management to find out where the
money was spent. As these accounts are used to define the nature of the transaction they are
nominal accounts.
Certain rules have to be followed for the different accounts to decide which account has to be
debited and which has to be credited. It is also important to understand whether the
transaction has to be posted n the debit side or the credit side of an account.

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7. ACCOUNTING SYSTEMS V/S ERP SYSTEMS

Growing companies who find they are straight-jacketed by their current accounting systems
are typically faced with the difficult decision of upgrading as they grow. They can either
choose to implement an all encompassing system or to bolt on smaller applications in order
to add capabilities to what they already have.
The first approach, typically an ERP (Enterprise Resource Planning) system, deals with every
aspect of business: from controlling marketing campaigns and sales reps, order collection,
product warehousing and distribution, payroll and HR, workflow, reporting, financials and
more. ERP systems are excellent but be prepared for long and costly implementation projects.
The second method: adding functionality to a core accounting system, is usually much less
stressful and costly to implement. The pitfalls may include: duplication of data (such as
customer records) which may be overcome with newer systems designed with seamless links.
This modular approach ends up less painful, as individual modules are purpose built with
more capabilities than ERP systems.
Which approach is best for you? In order to assess this, you need to list and priorities your
requirements and note which are not adequately achieved by your current solution. The
modular approach is only ever a viable option if you are relatively happy with your core
accounting system and there are ranges of available bolt on applications (to satisfy the
missing needs) that link seamlessly with it.
In evaluating both options, you must include all costs such as additional hardware; system
software; costs of data conversion, configuration, testing, training and on-going support; and
maintenance costs.
The selection process is complex and often risky especially in recessionary times. You may
choose to seek the advice of a Business Consultant with deep knowledge of a number of
popular Modular and ERP Business Accounting Systems.

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8. ABOUT SAP
SAP is the worlds leading provider of business software. More than 46,100 customers in
more than 120 countries run SAP applications from distinct solutions addressing the
needs of small and midsize enterprises to suite offerings for global organizations. Powered by
the SAP Net Weaver platform to drive innovation and enable business change, SAP software
helps enterprises of all sizes around the world improve customer relationships, enhance
partner collaboration and create efficiencies across their supply chains and business
operations. SAP solution portfolios support the unique business processes of more than 25
industries, including high tech, retail, financial services, healthcare and the public sector.
SAP defines business software as comprising enterprise resource planning and related
applications such as supply chain management, customer relationship management, product
life-cycle management and supplier relationship management.
SAP undertakes no obligation to publicly update or revise any forward-looking statements.
All forward-looking statements are subject to various risks and uncertainties that could cause
actual results to differ materially from expectations The factors that could affect SAPs future
financial results are discussed more fully in SAPs filings with the U.S. Securities and
Exchange Commission (SEC), including SAPs most recent Annual Report on Form 20-F
filed with the SEC. Readers are cautioned not to place undue reliance on these forwardlooking statements, which speak only as of their dates.

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WHY DO COMPANIES USE SAP (SYSTEM APPLICATION

AND PRODUCT)??
There are many reasons a company selects and implements SAP some are good and some
are bad. The good ones include replacing an out-dated and inefficient IT Architecture
(including the CIOs nemesis the burning platform), enabling business process change,
and to gain competitive advantage. The bad ones are too numerous to go into here but would
include the why are we the only semiconductor company without SAP question. More on
the good reasons follows:
1.

Replacing an out-dated and inefficient IT Architecture: In the beginning, computer

systems were developed by individual departments to satisfy the requirements of that
particular department. When someone finally realized that benefits could be had by
linking these systems together, interface heaven was born. There are some companies
today with literally thousands of interfaces, each of which needs to be maintained
(assuming of course that there is someone around who understands how they work!).
Sweeping them away and replacing them with an integrated system such as SAP can
save much money in support. Of course, if you have a burning platform as well the
question becomes even easier.

2.

Enabling business process change From the start, SAP was built on a foundation of
process best practices. Although it sounds absurd, it is probably easier (and less
expensive) to change your companies processes to adapt to SAP than the other way
around. Many companies have reported good success from combining a SAP
implementation with a BPR project.

3.

Competitive advantage The CFO types around have heard this old saying from the
CIO types for many years now. The question still has to be asked can you gain
competitive advantage from implementing SAP. The answer, of course, depends on the
company. It seems to us, however, that:
Being able to accurately provide delivery promise dates for manufactured products
(and meet them) doesnt hurt and
Being able to consolidate purchase decisions from around the globe and use that
leverage when negotiating with vendors has got a help and
Being able to place kiosks in stores where individual customers can enter their
product specifications and then feed this data directly into its production planning
process is pretty neat. Etc

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8. CONCLUSION
The aim of the present study was to investigate the accounting benefits derived from ERP
application in the accounting department and whether differences between accountants and IT
professionals exist concerning the measurement of accounting benefits and ERP user
satisfaction. Moreover, this study tried to evaluate the effect of accounting benefits, number
of modules implemented and ERP cost on ERP user satisfaction. Companies that operate in
Greece and have adopted an ERP system provided the data presented here. This study
explored the impact that the ERP system has had on accounting information and practice.
So according to me ERP is more beneficial to the company then accounting. Enterprise
Resource Planning (ERP) can provide a lot of benefits to organization such as lower cost,
increase level of data consistency, enable different departments such as Marketing,
Distribution, and Manufacturing etc. to share information together, increasing ability to do ebusiness. Even though, ERP can provide many benefits, it also can lead to tragedy in
implementation because of complexity to implement, time consuming, requiring a lot
resource such as money, human resource, hardware, and software. Not only resource that is
needed, but the commitment from top management and users also

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REFERENCE

http://www.jsw.in
http://www.moneycontrol.com/
http://en.wikipedia.org/wiki/SAP_ERP

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