Explain briefly any six advantages of computerized accounting system over the manual system
Answers
Answer:
Key Differences Between Manual and Computerized Accounting
Key Differences Between Manual and Computerized AccountingThe difference between manual and computerized accounting is explained below in points:
1.Manual Accounting refers to the accounting method in which physical registers for journal and ledger, vouchers and account books are used to keep a record of the financial transactions. On the other hand, computerized accounting implies the method of accounting, which uses an accounting software or package, to record the monetary transactions, which happen to an organization.
2.In manual accounting, recording of the transaction can be done through the book of original entry, i.e. journal day book. Conversely, in computerized accounting, the transactions are recorded in the form of data, in the customised database.
3.In manual accounting, all the calculations, i.e. addition, subtraction, etc. with respect to the transactions are performed manually. In contrast, in computerized accounting, there is no need to perform calculations, as the calculations are performed by the computer automatically.
4.One of the merits of computerized accounting which manual accounting lacks is that in manual accounting there is no way to back up all the entries and financial statements, but in computerized accounting, the accounting records can be saved and backed up.
5.Computerized Accounting can be described as the accounting system that uses the computer system and pre-packaged, customised or tailored accounting software, to keep a record of financial transactions and generate financial statements, for analysis.
6.Computerized Accounting system relies on the concept of a database. The accounting database is systematically maintained, with active interface wherein accounting application programs and reporting system are used. The two primary essentials are:
a) Accounting framework: The framework comprises of principles and grouping structure for maintaining records.
b)Operating procedure: There is a proper procedure for operating the system so as to store and process the data.
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Explanation:
Accuracy – there is less room for errors as only one accounting entry is needed for each transaction rather than two (or three) for a manual system. ... Cost savings – computerized accounting programs reduce staff time doing accounts and reduce audit expenses as records are neat, up-to-date and accurate.