Comparison between manual and computerized accounting

Accounting is a fundamental motto of every company. Without accounting practice, it is difficult to be effective in your business. Basically, it helps you monitor the transactions that occur and make sure that all expenses are significant. Accounting helps you reduce unnecessary expenses and increase the profit scale of the business. All companies implement the same transaction recording strategy to achieve maximum profit with minimized expense. Accounting can be done manually or through accounting software. We are going to discuss about the advantages and disadvantages of manual accounting and computerized accounting in this article.

Generally, the accounting cycle has certain activity steps. Record all transactions as “Daily”. Publish them in ledger accounts. Prepare trial balance, make adjusting entries, prepare adjusted trial balance, prepare financial statements and appropriate disclosures, publish closing entries, and prepare balance sheet. It’s about accounting. It’s no big deal to go through this sequential process, but it does get dramatically hectic when there are thousands of transactions.

Let’s focus here on the main problems of manual accounting. Paper jobs are involved in manual accounting. All accounting activities would be done on paper manually. Obviously, it would take a lot of time and resources for the large organization. Computerized accounting saves a lot of time in which the employee has to record the transactions and all the other calculations would be done through the software, either automatically or by request. Computerized accounting provides accurate results in accurate reporting, but some programs are time and resource intensive as manual accounting requires. Therefore, it is not easy to decide which software would work faster and cheaper. The best computerized accounting software is very expensive. On the other hand, computerized accounting could handle thousands of calculations simultaneously where manual accounting takes a long time to do that. Even then, we cannot say that manual accounting does not provide benefits. Manual accounting can be handled with labor and financial resources. It is reliable since it is done manually with minutes of observations. You don’t have to depend on machines.

The main advantage of computerized accounting is speed and accuracy. We can have a simple backup and restore system. All data and information will be protected. Disadvantages include high cost, system upgrade, special training for personnel, relying only on machines, and reduced employment.

Both computerized and manual accounting got the merits and demerits. They can only be differentiated in terms of cost, speed and mobility. It can be implemented according to the size of the business. Small and medium-sized businesses prefer manual accounting considering the low cost. They could use quality accountants and carry out the day-to-day business or they could even simply transfer their accounting tasks to an outsourcing company. Large-scale companies completely rely on computerized accounting as it provides fast and accurate results. It would be very helpful for them to have the accounting records without any chaos.

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