Scribd
Upload
131 views2 pages

Manual vs. Computerized Accounting Systems

The document compares manual and computerized accounting systems. While the accounting principles are the same, computerized systems are generally faster, more accurate, and more secure. They are better able to track large volumes of complex transactions and share information across organizations. However, for small businesses with simple accounting needs, a manual system may be sufficient and less expensive initially. The document discusses the similarities and differences in accuracy, speed, access, security, and costs between the two approaches.

Uploaded by

Ran Jung Escabarte
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
131 views2 pages

Manual vs. Computerized Accounting Systems

The document compares manual and computerized accounting systems. While the accounting principles are the same, computerized systems are generally faster, more accurate, and more secure. They are better able to track large volumes of complex transactions and share information across organizations. However, for small businesses with simple accounting needs, a manual system may be sufficient and less expensive initially. The document discusses the similarities and differences in accuracy, speed, access, security, and costs between the two approaches.

Uploaded by

Ran Jung Escabarte
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 2

Manual vs.

Computerized Accounting Systems


By: Fraser Sherman
Reviewed by: Jayne Thompson, LL.B., LL.M.
Updated August 27, 2019

It's possible to handle business bookkeeping in a physical, hard-copy ledger instead of a


computer. Does that make it a good idea? Computer advocates say software is faster, more
accurate and more secure. Comparing manual accounting vs. computerized accounting usually
makes software look like the better alternative. However, if your accounting is simple and you
prefer a hard copy, there's nothing wrong with that.

Similarities Between Manual and Computerized Accounting

The biggest of the similarities between manual and computerized accounting is that the rules of
accounting don't change, regardless of how you record data. Double-entry bookkeeping, where
you debit office equipment when you buy a new computer and credit the same amount to cash or
accounts payable, is still the gold standard; financial statements have to meet the same
requirements.

Another similarity is that whichever method you use, you face the same requirements:

• The accounting has to be accurate.

• You don't want someone falsifying entries or altering entries without authorization.

• You can't afford to lose your records to a computer crash or a fire.

• Practical considerations matter. You don't want to spend more than necessary, and you don't
want to spend more time entering information than you have to.

For most users, the difference between a manual and computerized accounting system is how
well they meet these requirements.

Accuracy in Accounting

The biggest problem in keeping accounting accurate is human error. Among the similarities
between manual and computerized accounting are that you can enter inaccurate figures either
way. It's easy to transpose $1,200 in sales revenue into $2,100 and not notice whether you're
typing or writing.

Software accounting isn't just about data entry, though. It's about tracking totals, subtracting
expenses from income and recording new equipment as assets on the balance sheet. Your
computer does this automatically; if you have to do it yourself, there's a much higher chance of
adding wrong and not even noticing it.
This also makes computerized accounting much faster, although it may take time for you to
master the software's quirks. Many programs can speed up or automate other tasks, such as
generating invoices or reports.

Your Bottom Line

If cost is a big issue in choosing manual accounting vs. computerized accounting, manual
accounting has the edge. A bookkeeper's journal is cheaper than good accounting software. If
you're a small startup with simple, cash-basis accounting, it may be all you need.

As your business grows and the accounting becomes more complex, the money you save may
not be worth it. If you run your operation on a cash basis, all you have to do is report when you
spend or receive money. If you switch to accrual accounting, as most larger businesses do, you
have to track money owed to you and money you owe, which is easier to lose track of.

Software programs can still go awry if you forget to enter information, but they make it much
easier to record lots of transactions. They're also quicker at complicated challenges such as
drawing up financial statements.

Access and Security

Another difference between a manual and computerized accounting system is the ease of access.
If you're a sole proprietor running a one-person business, that's irrelevant: you're the only one
who needs to see the ledger most of the time. If, however, you have a multi-million dollar
business with a half-dozen department heads and a board of directors, lots of people may need to
view the accounts.

With a computer, it's much easier to share information around the organization. If you install
good safeguards on the system, it should be harder for anyone to access and alter the data.

The risk of damage and data loss exists either way. Data can be corrupted or wiped out by a
virus; hard copy ledgers can die from fire or water. However, it's a lot simpler and quicker to
back up digital data and store it somewhere secure than to make copies of all your ledgers.

Retrieved from:
https://bizfluent.com/about-5410997-manual-vs--computerized-accounting-systems.html

You might also like