UNIT-5

Significance of computerized accounting system - codification and grouping of accounts -

Maintaining hierarchy of ledgers prepackaged accounting software case study.

INTRODUCTION:
Computerized accounting systems automate the accounting process--improving efficiency and
cutting down costs. Computerized accounting has many advantages over traditional manual
accounting. Computerized accounting tends to be more accurate, is faster to use, and is less subject
to error than its manual counterpart
Meaning of Computerized Accounting System

As its name suggests, "computerized accounting" is accounting done with the aid of a computer.
It tends to involve dedicated accounting software and digital spreadsheets to keep track of a
business or client's financial transactions. • Computerized accounting is a beneficial use of
current technological advances. Not only has it revolutionized the traditional paper methods of
accounting, but it has also created new types of accounting applications for business. Companies
now create entire accounting information systems that integrate all business operations, including
external suppliers and vendors in the value
chain. • Computerized accounting systems (or software) have replaced manual based accounting
in virtually all businesses and organizations, providing accountants, managers, employees and
stakeholders access to vital accounting information at the touch of a button. Computerized
accounting systems automate the accounting process--improving efficiency and cutting down
costs. • Computerized accounting has many advantages over traditional manual accounting.
Computerized accounting tends to be more accurate, is faster to use, and is less subject to error
than its manual counterpart.

INPUT
OUTPUT
PROCESSING
SOURCE DOCUMENT
INFORMATION
COMPUTER
SET OF RULES &
SOFTWARE FINAL ACCOUNTS
PROCEDURES

Input: the input to computerized accounting system is the accounting data which is obtained
from details of each transaction. Data is originated from source document and this is produced
as a result of happening of a transaction, is kept as a proof of transaction. Source document
includes invoice cheques received, sales order forms etc. computers are used to produce source
documents and data is automatically inputted to the system for shortage and further processing.
Another input to system is set of accounting rules and procedures which are coded in
accounting software are run by computers when transactions are processed by systems.
Processing: The computerized accounting systems are built to take advantages of fast processing
capability of modern day computers. In this stage the accounting data is processed as for
 accounting rules of double entry system of book keeping. The only additional here is that unlike
manual accounting computerized accounting system are very fast and error free.
Output: The basic output of this system is trading account, profit and loss account, and balance
sheet. Computerized accounting system produces these final accounts automatically and on user’s
request. These statements can be produced as often as required which is tedious and time
consuming activity in manual accounting system procedure. They also transfer output of one
component of computerized accounting to another component as input. It means that data sharing
is possible in this accounting system.
Automatic document production: Instant and reliable receipts, invoices, credit notes, sales
order, purchase order, payroll documents, statement of comprehensive income and statement of
financial position are generated automatically.
Availability of information: Financial information is readily available to users of accounting
information for decision making at any time.
Importance:
Accounting system is the whole procedure of producing accounting information.
Computerized accounting system is the method of generating accounting information for
decision making through computer with support of accounting software. This method is very
beneficial and important to businesses.

Storage: Storing information is inevitable in business. Computerized accounting system makes

it possible for storage of information. Information saved can also be retrieved whenever needs
arise. Note that it is compulsory to back up your data. The backup could be done by the use of
flash drive, external back up and any other storage devices.
Compatibility: It makes the preparation of accounting for merger and acquisition very easy
where the companies involved use the same accounting software. Manual accounting system
could be too cumbersome for the preparation of accounting for merger and acquisition.

Advantages:

Automation: Since all the calculations are handled by the software, computerized accounting
eliminates many of the mundane and time-consuming processes associated with manual
accounting. For example, once issued, invoices are processed automatically making accounting
less time-consuming.
Accuracy: This accounting system is designed to be accurate to the minutest detail. Once the
data is entered into the system, all the calculations, including additions and subtractions, are
Output: The basic output of this system is trading account, profit and loss account, and balance
sheet. Computerized accounting system produces these final accounts automatically and on user’s
request. These statements can be produced as often as required which is tedious and time
consuming activity in manual accounting system procedure. They also transfer output of one
component of computerized accounting to another component as input. It means that data sharing
is possible in this accounting system.

Automatic document production: Instant and reliable receipts, invoices, credit notes, sales
order, purchase order, payroll documents, statement of comprehensive income and statement of
financial position are generated automatically.
Availability of information: Financial information is readily available to users of accounting
information for decision making at any time.
Importance:
Accounting system is the whole procedure of producing accounting information.
Computerized accounting system is the method of generating accounting information for
decision making through computer with support of accounting software. This method is very
beneficial and important to businesses.

Storage: Storing information is inevitable in business. Computerized accounting system makes

it possible for storage of information. Information saved can also be retrieved whenever needs
arise. Note that it is compulsory to back up your data. The backup could be done by the use of
flash drive, external back up and any other storage devices.
Compatibility: It makes the preparation of accounting for merger and acquisition very easy
where the companies involved use the same accounting software. Manual accounting system
could be too cumbersome for the preparation of accounting for merger and acquisition.
Advantages:
Automation: Since all the calculations are handled by the software, computerized accounting
eliminates many of the mundane and time-consuming processes associated with manual
accounting. For example, once issued, invoices are processed automatically making accounting
less time-consuming.
Accuracy: This accounting system is designed to be accurate to the minutest detail. Once the
data is entered into the system, all the calculations, including additions and subtractions, are
done automatically by software. There is less space for error because only one account entry is
needed for each transaction unlike repeated posting of the same accounting data in manual
system.
Data Access: Using accounting software it becomes much easier for different individuals to
access accounting data outside of the office, securely. This is particularly true if an online
accounting solution is being used.
Reliability: Because the calculations are so accurate, the financial statements prepared by
computers are highly reliable. Computer systems are immune to boredom, tiredness or fatigue.
Therefore, these can perform repetitive functions effectively and are highly reliable as compared
to human beings.
Scalable: When your company grows, the amount of accounting necessary not only increases
but becomes more complex. With computerized accounting, everything is kept straightforward
because sifting through data using software is easier than sifting through a bunch of papers.
Speed: Using accounting software, the entire process of preparing accounts becomes faster.
Furthermore, statements and reports can be generated instantly at the click of a button.
Managers do not have to wait for hours, even days, to lay their hands on an important report.
Computers require far less time than human beings in performing a particular task. Therefore,
accounting data is processed faster using a computerized accounting system.
Security: The latest data can be saved and stored in offsite locations so it is safe from natural
and man-made disasters like earthquakes, fires, floods, arson and terrorist attacks. In case of
disasters, the system can be quickly restored on other computers. This level of precaution is
taken by Clever Accounting.
Cost-effective: Since using computerized accounting is more efficient than paper-based
accounting, than naturally, work will be done faster and time will be saved. When one considers
that Clever Accounting, one of the latest online accounting solutions, starts at a low monthly
subscription (check out pricing here), then computerized accounting really becomes a no- brainer.
Visuals: Viewing your accounts using a computer allows you to take advantage of the option to
view your data in different formats. You can view data in tables and using different types of
charts. Computerized Accounting represents a technological advancement in the field of business
accounting.
Up-to-date information – the accounting records are automatically updated and so account
balances (e.g. customer accounts) will always be up-to-date.
Availability of information – the data is instantly available and can be made available to
different users in different locations at the same time. This is called data sharing.
MIS Reports– reports can be produced which will help management monitor and control the
business, for example the aged debtors analysis will show which customer accounts are
overdue, trial balance, trading and profit and loss account and balance sheet.
It is easier to monitor and control the business using the real time management information
reports generated by the computerized information systems.
GST returns – the automatic creation of figures for the regular GST returns.
Efficiency – better use is made of resources and time; cash flow should improve through better
debt collection and inventory control. The computer based accounting system ensures better use
of time and resources.
Staff motivation – the system will require staff to be trained to use new skills, which can make
them feel more motivated. Further to this with many ‘off-the-shelf’ packages like MYOB the
training can be outsourced and thus making a particular staff member less critical of business
operations.
Limitations:
Heavy Cost of Installation: Computer hardware needs replacing and software needs to be
updated from time to time with the availability of newer versions.
Cost of Training: To ensure effective and efficient use of computerized system of accounting,
newer versions of hardware and software are introduced. This requires special training and cost
is incurred to train the staff personnel as specialists.
Unemployment: Reflects the feelings of the staff on the introduction of computerized
accounting system. The staff fears redundancy and show less interest in computers.
Disruption in Work: When computerized system is introduced, there might be loss in the work
time and certain changes in the working environment.
System Failure: The danger of a system crashing due to some failure in hardware can lead to
subsequent loss of work. This occurs when no back-up is retained.
Time Consuming: In order to avoid loss of work at the time of system failure, there is a need
for providing backup arrangements which is a time consuming process.
Unanticipated Errors not Known: Unlike human beings, computers do not have the capability
to judge or detect unanticipated errors in the system.
Breaches of Security: The danger of viruses and hacking into the system from outside creates a
strong need for security of system. Similarly, the person who has created the specific program
can easily defraud by tampering with the original records.
Health Dangers: Extensive use of computers may lead to many health problems such as
eyestrain, muscular complaints, backache etc. resultantly reducing working efficiency as well as
increasing medical expenditure.

Differences between Manual and Computerized Accounting

Provision of financial statements: In manual accounting, company accountants require trial
balance to prepare the periodical financial statement. For computerized software accounting
however, financial statements are easily generated by the software system itself so that business
owners and accountants do not need to have trial balance in advance.
Recording of the financial statements: Recording process requires computing mathematical
functions manually and putting them down in paper copy as well as posting them on ledger or
books of original entry. Computerized software accounting performs the mathematical functions
through internal data computation process as long as the right data information was fed into the
software.
Rate of accounting computation: Computing the transactions in manual accounting is slower
since it requires a stage by stage calculation by use of human mind and hand. Computerized
software accounting is much faster in computing the transactions since the software
automatically processes the data once it is fed, or the software is commanded.
Backup retrieval: For manual accounting retrieving financial records might be tedious and
tiresome since it might involve looking for various paper documents for reference.
Computerized software accounting easily retrieves the backup information since accountants or
business owners only have to click on the saved financial records to get the ones they need.
Ease of classifying accounting statements: for manual accounting, prior to ledger accounts
preparations, the transactions have to be recorded in the books of original entries. In
computerized accounting software, the software classifies different financial statements
automatically, and business owners or accountants can easily classify financial statements they
require at any moment.
Accuracy of Financial Records: For Manual accounting records to be accurate, accountants
and business owners have to be very careful and highly competent to compile the financial
report accurately. With computerized accounting, as long as you have the correct data and
software commanded to perform; accurate financial statements will be produced.
Manual accounting financial records can be used easily for review. The corrections and
adjustments can also be easily made. In computerized software accounting, the review of
financial statements is quick, and the understanding of its computation can be achieved by
carefully examining the financial formula.
Speed: Computerized accounting produces information much faster than manual accounting.
Accounting software packages, such as QuickBooks and Peachtree, come with built-in
databases that allow users to input data.
Financial Statements: In a manual accounting system, you have to prepare your company's
income statement, balance sheet and statement of owner's equity by hand. Information from
your journal entries helps formulate your company's financial statements. Computerized
accounting systems allow financial statements to be created from information stored in the
database.
Cost: The cost of computerized accounting systems can range from hundreds to thousands of
dollars for large businesses. A computerized accounting system may save on man hours used
for creating financial statements and other reports. For this reason, many small and mid-sized
businesses use computerized accounting software.
Reports: Reports are created in a timely manner when using a computerized accounting system.
Reports generated from computerized accounting software allow managers to run the company
in a more efficient manner. Creating reports in a manual accounting system may lead to more
staff frustration and result in having to work with outdated information.
Safety: Accounting records kept on the manual system can be lost or damaged easily, such as by
coffee spills. On the other hand, records kept by a computer are likely to be safer because many
systems are backed up often. If you lose pages in a paper pad, you may have to recreate the
transactions by conducting research and writing them in again. In a computerized system, you
simply restore the latest backup and add a few transactions that were not saved. In this area,
accounting software is obviously superior to manual systems.
Properly Organized: Data processed through software is organized and easy to find. That's not
the case with manual systems, where you may have to review several pages to find what you
need. For instance, if you want to find certain data about a vendor, you can go to the accounts
payable section of the software, usually by clicking a link or tab, and conduct a search for the
vendor.
If you conduct the same process on a manual system, you may have to go through several pages
and take your time to find what you're looking for.
Significance: Information technology plays an important role in accounting processes because
it improves financial reporting procedures and prevents errors in financial statements.
Time Frame: Computerized accounting activities help an accountant perform month-end close
procedures. These activities also help company report profit information over a period, such as a
month or quarter
Features of accounting packages
1. Reporting and analysis: Information is power in today's challenging business environment.
That's why any accounting program you evaluate must have robust reporting and analysis
capabilities. Besides helping users gain insight into crucial financial activities, reporting and
analysis functions help companies conform to government and industry regulations.

2. Graphics: Accounting is a numbers-focused activity. Yet graphics, in the form of charts and
other illustrative formats, is a powerful tool that can be used to present trends and other concepts
in a way that numbers alone can't convey.
3. Automation: For many businesses, support for simple accounting transactions and basic
financial management tasks just isn't enough. Many companies require the full automation of
employee expenses, payrolls and time sheets; company and departmental budgets; purchase
requisitions and other complex financial activities.
4. Automatic updates: Using out-of-date accounting software is like eating food that has
passed its expiration date — a risky proposition that could result in severe nausea. Tax laws,
regulations and financial practices change over time, so it's vital to use software that receives
fast, user-transparent, automatic updates.
5. Customization: Chances are that no accounting software will exactly match your business's
needs. That's why you'll want to look for a product that allows the easy customization of
statements, forms, reports, screens, help systems and other program facets.
6. Internet connectivity: With the whole world moving to the Internet, it's only logical that
accounting software should follow the crowd. That's why you'll want to make sure that any
accounting software you consider has the ability to send and receive digital documents and
handle electronic fund transfers.
7. Inter operability: The data entered into your accounting software can be productively used
by various business applications in HR, sales, shipping and other key business sectors.
Conversely, you may want your accounting program to draw information in from other software
products. That's why you'll want to check on an accounting program's ability to interoperate with
other software before deciding on whether to purchase it.
8. Scalability: With hard work, and perhaps some luck, your business will be larger and more
prosperous in the years ahead. Will your accounting software be able to keep pace? Look for a
product that accommodates, or can be easily upgraded to accommodate, a progressively larger
number of users and a growing amount of financial data and transactions. Ask vendors about
their programs' limits in these areas.
9. Expandability: Your business may grow in scope as well as size. The accounting program
vendor should either offer add-on modules that allow customers to slap extra capabilities to its
product, or a migration path to a full ERP environment.
10. Security: Your business depends on its accounting software for its very existence. If data is
lost or tampered with you stand to lose time, money, business secrets (such as sales or profit data)
and, if the damage is severe enough, your company. Any vendor should be able to tell you about
its software's built-in security features as well as how its product can mesh with your own on-site
safeguards (such as anti-malware technology and network firewalls).
11. Banking: At the very least, accounting software should have some form of link to your bank
account, enabling you to make direct payments and letting you import data from the bank into the
accounting system. Some software can go much further: Reconcile accounts, Prepare bank
deposits & Check handling.
12. Reporting: Besides the array of different features that are available in accounting software,
the quality and quantity of reports the system can generate differs widely, too. Some systems
offer a vast range of reporting options, with almost unlimited categories and reporting options.
Others just offer the basic reports: money in and money out. Here are some of the better options:
Standard reports, Customizable reports, Graph summaries, Cost predictions
Subsidiary reporting.

13. Shipping: For online retailers and those businesses that frequently send goods out by
couriers, an accounting platform that can handle shipping processes will save you from having
to invest in a separate shipment software program. Here are some of them: Print shipping
labels, Estimate shipping costs, Track shipments, Drop shipments.
14. Inventory: An accounting system with stock and inventory controls can really streamline
your business, helping you identify what's in stock, what needs reordering, and where your
purchasing budget is being spent. Some of them are Track inventory, Set inventory levels,
Specify stock locations, Include item images.
 Applications:
To maintain Accounting Record of large organisations is Possible: Suppose, you are
the accountant of big MNC. What you see in its business. There are millions of clients
from whole world. Is it possible to record all in manual basis. It will be impossible. So,
computer and accounting software in it, it will so easy to keep unlimited accounting
records without any risk of forgetting.
1. Separate Payroll Accounting is Possible: We all know top costly expense in the
business is the salary of employees. So, it must be recorded separately. Computer can
help in this. Anytime any edit regarding salary, name or any other adjustment in payroll
is possible.
2. Automation of All Financial Accounts: Just go to any CA office. In its computer
system, you will see lots of company's financial statements and other accounting reports.
How can company fastly send its financial statements to CA office for audit. Answer is
very simple. Everything has connected with computer. If accountant will pass voucher
entries, financial accounts will automatically be created by computer software.
3. Graphic Presentation of Accounting Results: Computer can be used for graphic
presentation of accounting results. You can see the sale trend graphs, charts and diagrams.
Not only sale trend but you can see anything in accounting area through graphic way. It
will so easy and understandable instead of reading only manual financialresults.
4. Updates are fast: If there is any mistake, we can easily correct. All the accounts will
automatically get corrected. In manual accounting, it is not possible. There are lots of
options which can help more fast providing the updated accounting reports. For example,
computer reminder system can send updated debt or credit balance to the customer.
5. Best Inventory Control: To record every small item in computer is so easy without
keeping big inventory registers. By comparing computer records of inventory and actual
inventory, anytime, we can check the difference and find the reason behind this
difference.
A proper codification requires a systematic grouping of accounts. The major groups or
heads could be Assets, Liabilities, Revenues and Expenses. The sub- groups or minor
heads could be capital, non-current liabilities, current assets, sales and so on.
Grouping and codification of accounts

When the volume and size of the business increase, the number of transaction increases.
Therefore, it becomes necessary to have proper classification of data.
 Grouping of accounts

In any organisation, the main unit of classification is the major head which is further divided into
minor heads. Each minor head may have number of sub-heads. After classification of accounts into
various groups namely, major, minor and sub-heads and allotting codes to each account these are
programmed into the computer system.

A proper codification requires a systematic grouping of accounts. The major groups or heads could
be Assets, Liabilities, Revenues and Expenses. The sub- groups or minor heads could be capital,
non-current liabilities, current assets, sales and so on.

In general, the basic classifications of different accounts embodied in a transaction are resorted
through accounting equation.

Assets = Liabilities + Capital + (Revenues – Expenses

Each component of the above equation can be divided into groups of accounts as follows:

Liabilities and capital A.

Capital
 · Capital
· Reserves and surplus
Non-Current Liabilities
· Long-term borrowings
· Other long-term liabilities
Current liabilities
· Short term borrowings
· Trade payables
· Other current liabilities
B. Assets
Fixed tangible assets
· Land and building
· Plant and machinery
· Furniture and fixtures
Intangible assets
· Goodwill
· Copyright
· Patents

Current Assets
· Short term investments
· Inventories
· Trade receivables
· Cash and cash equivalents
· Short term loans and advances
· Other current assets
C. Revenues
· Sales
· Other income
D. Expenses
· Material consumed
· Wages
· Manufacturing expenses
· Depreciation
· Administrative expenses
· Interest
· Selling and distribution expenses, etc.
Codification of accounts
Code is an identification mark. Generally, computerised accounting involves codification of
accounts. Codification of accounts is needed where there are numerous accounts heads in an
organisation. There is a hierarchical relationship between the groups and its components. In order
to maintain the hierarchical relationships between a group and its sub-groups, proper codification is
required.
The coding scheme of account heads should be such that it leads to grouping of accounts at various
levels so as to generate various reports. For example, the codes for various accounts may be allotted
as follows:
i. Liabilities and Capital
ii. Assets
iii. Revenues
iv. Expenses
Under Liabilities and Capital
i. Capital
ii. Non-current liabilities
iii. Current liabilities
Under Assets
i. Non-current assets
ii. Current assets
The above codification scheme utilises the hierarchy present in grouping of
accounts. Major advantage of such coding is that if the account codes are listed in ascending order,
these will be automatically listed as per the desired hierarchy.
Methods of codification
Following are the three methods of codification.
a. Sequential codes
In sequential code, numbers and/or letters are assigned in consecutive order. These codes are applied
primarily to source documents such as cheques, invoices, etc. A sequential code can facilitate
document search. For example:
Code Accounts
CL001 ABC LTD
CL002 XYZ LTD
CL003 SCERT
b. Block codes
In a block code, a range of numbers is partitioned into a desired number of sub-ranges and each sub-
range is allotted to a specific group. In most of the cases of block codes, numbers within a sub-range
follow sequential coding scheme, i.e., the numbers increase consecutively. For example:
Code Dealer type
100 – 199 Small pumps
200 – 299 Medium pumps
300 – 399 Pipes
400 – 499 Motors
c. Mnemonic codes
A mnemonic code consists of alphabets or abbreviations as symbols to codify a piece of information.
For example:
Code Information
SJ Sales Journals
HQ Head Quarters

MAINTAINING THE HIERARCHY OF LEDGERS

 Some accounting software allows ledgers and subsidiary ledgers to be created from the
main ledgers. The subsidiary ledgers can further be subdivided to sub subsidiary ledgers thereby
allowing grouping under various profit centres.

1. There are several prepackaged accounting software which are available in the market and are
used extensively for small and medium sized organizations.
2. These software’s are easy to use, relatively inexpensive and readily available.
3. The installation of these software’s are very simple. An installation diskette or CD is provided
with the software which can be used to install the software on a personal computer. A network
version of this software is also generally available which needs to be installed on the server and
work can be performed from the various workstations connected to the server.
4. Along with the software an user’s manual is provided which guides the user on how to use the
software.
5. After installation of the software, the user should check the version of the software to ensure that
they have been provided with the latest.
6. The vendor normally provides regular updates to take care of the changes of law as well as add
features to the existing software.
7. These softwares normally have a section which provides for the creation of a company. The name,
address, phone numbers and other details of the company like VAT registration number, PAN and
TAN numbers are feeded into the system. The accounting period has to be set by inserting the first
and the last day of the financial year.
The next step in the use of this software could be the creation of accounts.
This is done by adding the accounts along with their codes into the master file files. Each
account has to be classified into whether it is an asset or liability or an income or expenditure to the
system.
The opening balances are to be entered into the master file files. The company parameters
need to be set at this point of time so that the accounts which are the cash, bank, sundry debtors,
sundry creditors, etc. are known to the system. The customers’ names, addresses and other basic
details are also entered in the customer master file. Similarly, the creditors details are entered into
the creditor master file files.
Product details are entered through the product master file files. Here the unit of
measurement and the opening stock quantities including the values are provided. The system of
valuation of stock like the FIFO, LIFO, Weighted average, etc. are defined in the product master
file files.

ADVANTAGES OF PRE-PACKAGED ACCOUNTING SOFTWARE

1. Easy to Install - The CD containing set up file is to be inserted and run to complete the installation
according to instructions as per user’s manuals.
2. Relatively Inexpensive - These packages are available at very cheap prices.
3. Easy to Use - These packages are mostly menu driven with the help options. Further the user
manual provides most of the solutions to problems that the user may face while using the software.
4. Simple Backup Procedure - Housekeeping section provides a menu for backup. The backup can
be taken on CD or hard disk.
5. Certain Flexibility of Report Formats Provided by some of the Software’s - This allows the user
to make the invoice, challan, GRNs look the way they want.
6. Very Effective for Small and Medium size Businesses - Most of their functional areas are covered
by these standardized packages.

DISADVANTAGES OF PRE-PACKAGED ACCOUNTING SOFTWARE

1. Does not cover Peculiarities of Specific Business - A standard package may not be able to take
care of the complexities of a specific business.
2. Does not cover all Functional Areas - These packages may not cover all functional areas such as
production process.
3. Customization may not be Possible - These packages may not be customized as per needs of
Customers.
4. Reports Generated - All reports required for exercising management control may not be available
in a standard package.
5. Lack of Security - Security is generally missing in a pre-packaged accounting package since any
person can view data of all companies with common access password.
6. Bugs in the software - Certain bugs may remain in the software which takes long to be rectified
by the vendor and is common in the initial years of the software.

CONSIDERATIONS FOR SELECTION OF PRE-PACKAGED ACCOUNTING SOFTWARE:-

The following factors should be considered while selecting pre-packaged accounting software:
1. Fulfillment of Business Requirements - The purchaser should ensure whether the available
Software meets all the business requirements.
2. Completeness of Reports: The purchaser should ensure whether the available software can
provide all the reports required by business.
3. Ease of Use - The purchaser should ensure whether the available software is easy to operate.
4. Cost - The software should not involve very high installation and running cost.
5. Reputation of the vendor - It should be ensured whether the vendor has good reputation and good
track records or not.
6. Regular updates - It should be ensured whether the vendor is prepared to give updates.

CASE STUDY:
Case Studies are widely used in Accountancy and Finance education. They offer students
the opportunity to develop their analytic and writing skills. They are most common used to examine
the communication skills and team working ability of the student

A case study is a detailed study of a specific subject, such as a person, group, place,
event, organization, or phenomenon. Case studies are commonly used in social,
educational, clinical, and business research.

A case study research design usually involves qualitative methods, but quantitative
methods are sometimes also used. Case studies are good for describing, comparing,
evaluating and understanding different aspects of a research problem.

Table of contents
 1.When to do a case study
A case study is an appropriate research design when you want to gain concrete,
contextual, in-depth knowledge about a specific real-world subject. It allows you to
explore the key characteristics, meanings, and implications of the case.

Case studies are often a good choice in a thesis or dissertation. They keep your project
focused and manageable when you don’t have the time or resources to do large-scale
research.

You might use just one complex case study where you explore a single subject in depth,
or conduct multiple case studies to compare and illuminate different aspects of your
research problem.

Step 1: Select a case

Once you have developed your problem statement and research questions, you should
be ready to choose the specific case that you want to focus on. A good case study
should have the potential to:

• Provide new or unexpected insights into the subject

• Challenge or complicate existing assumptions and theories
• Propose practical courses of action to resolve a problem
• Open up new directions for future research

TipIf your research is more practical in nature and aims to simultaneously investigate an
issue as you solve it, consider conducting action research instead.
Unlike quantitative or experimental research, a strong case study does not require a
random or representative sample. In fact, case studies often deliberately focus on
unusual, neglected, or outlying cases which may shed new light on the research
problem.

Example of an outlying case studyIn the 1960s the town of Roseto, Pennsylvania was
discovered to have extremely low rates of heart disease compared to the US average. It
became an important case study for understanding previously neglected causes of heart
disease.
However, you can also choose a more common or representative case to exemplify a
particular category, experience or phenomenon.

Example of a representative case studyIn the 1920s, two sociologists used Muncie,
Indiana as a case study of a typical American city that supposedly exemplified the
changing culture of the US at the time.

Step 2: Build a theoretical framework

While case studies focus more on concrete details than general theories, they should
usually have some connection with theory in the field. This way the case study is not just
an isolated description, but is integrated into existing knowledge about the topic. It might
aim to:

• Exemplify a theory by showing how it explains the case under investigation

 • Expand on a theory by uncovering new concepts and ideas that need to be incorporated
• Challenge a theory by exploring an outlier case that doesn’t fit with established
assumptions

To ensure that your analysis of the case has a solid academic grounding, you should
conduct a literature review of sources related to the topic and develop a theoretical
framework. This means identifying key concepts and theories to guide your analysis and
interpretation.

Step 3: Collect your data

There are many different research methods you can use to collect data on your subject.
Case studies tend to focus on qualitative data using methods such
as interviews, observations, and analysis of primary and secondary sources (e.g.,
newspaper articles, photographs, official records). Sometimes a case study will also
collect quantitative data.

Example of a mixed methods case studyFor a case study of a wind farm development in
a rural area, you could collect quantitative data on employment rates and business
revenue, collect qualitative data on local people’s perceptions and experiences, and
analyze local and national media coverage of the development.

Describe and analyze the case

In writing up the case study, you need to bring together all the relevant aspects to give as
complete a picture as possible of the subject.

How you report your findings depends on the type of research you are doing. Some case
studies are structured like a standard scientific paper or thesis, with separate sections or
chapters for the methods, results and discussion.

Others are written in a more narrative style, aiming to explore the case from various
angles and analyze its meanings and implications (for example, by using textual
analysis or discourse analysis).

In all cases, though, make sure to give contextual details about the case, connect it back
to the literature and theory, and discuss how it fits into wider patterns or debates.

Case study examples

Research question Case study

What are the ecological effects of wolf reintroduction? Case study of wolf reintroduction in Yellowstone National
Park

How do populist politicians use narratives about history to gain Case studies of Hungarian prime minister Viktor Orbán and
support? US president Donald Trump
Case study examples

Research question Case study

How can teachers implement active learning strategies in mixed- Case study of a local school that promotes active learning
level classrooms?

What are the main advantages and disadvantages of wind farms Case studies of three rural wind farm development projects in
for rural communities? different parts of the country

How are viral marketing strategies changing the relationship Case study of the iPhone X marketing campaign
between companies and consumers?

How do experiences of work in the gig economy differ by gender, Case studies of Deliveroo and Uber drivers in London
race and age?