Computerised and manual

accounting system and its benefits

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 

Introduction: In this report, I will outline what is a computerise and
manual accounting system. How the development have either helped or hindered
traditional accounting systems and what are each of their advantages and
disadvantages.

 

Computerised
Accounting Software

A Computerised accounting software is
a program that assists bookkeepers and accountants in recording and reporting an
organisations financial transaction. The functionality of accounting software
differs from product to product. One of the popular examples of accounting
software is “Sage”.  

 

Sage has an online accounting service
to create invoices, submit your VAT return and track who owes you money. They
also have bookkeeping software for managing day-to-day finances.

Sage has many packages to help your
business from sales journal to international trading management. Sage helps businesses
even if they don’t have previous business experience. The company also has low
offers that will suit any business. (Sage.com, 2018)

 

The software aims to enable you to
target prospects and build strong relationships with customers. Sage’s
effective marketing campaigns, manages sales and helps improve customer
service. The software helps to advice you on protecting your margins and
reducing cost of sale. The software enables templates so that you can proceed
quicker with business operations.

 

The accounting software helps you to
prepare invoices quickly and efficiently as customer spending patterns can be
predicted as the software remembers the individual costs on customer’s latest
invoices. The Computerised system is scalable, accurate, accessible, automated,
fast, secure and cost effective in the sense of saving time and paper.

 

Benefits
of the software

The benefits of using “Sage One” is
that it costs less than £5 a month for a small business management but can
reach up to £650 for bigger businesses. Sage software such as “Sage One”
software is easy to learn and operate saving time and costly accounting
mistakes. Data is stored for fast retrieval so that normal accounting practices
can be checked effortlessly as well as inventory checks and more. (Sage.com, 2018)

 

If you are learning to do accounting
for the first time, manual accounting will teach you the ins and outs of
balancing debits, credits, and keeping up with things such as depreciation
costs and forecasting expenses. This experience helps you to understand
accounting transactions if you then computerise your accounts later.

 

Manual accounting does consume an
awful amount of time by physically entering the transactions and calculating
them manually. Manual accounting system also costs less than a computerised
system, but computerised system have a great advantage when it comes to storage
of huge data files and continuous years of records which is easily stored on a
computer hard drive or online to be reviewed at any time or filtered by a
specific category.

 

The advantage of computerised software
is that it minimises the time it takes to enter data from ledgers into the
company records using a computerise system. The software allows users to
organise and edit records easily. The software also does major calculations
quickly in seconds upon entering. The efficiency of using a computerised
accounting system can save you a lot of time. Accounting software allows faster
data entry than manual accounting and allows documents such as: invoices,
purchase orders and payroll to be collated and printed quickly with accuracy.

 

The computerised accounting software
needs maintenance that is an extra-incurred cost if your package is costly. The
disadvantage is the need to protect against data loss through power failure or
viruses, danger of hackers stealing data and erasure of business data if not
backed up. Computer fraud is also a concern, and you need to instigate a system
of controls for who has access to the information, particularly customer
information.  (Andrew Thomas, Anne Marie ward, 2012)

 

The other disadvantage is that the
accounting software needs maintenance and is a challenge for non-accountants to
operate the software with little accounting knowledge and computer skills. Therefore,
training is needed for the staff taking up time and money. Training is
also needed for staffs and sometimes errors can occur if not carried out
properly. Human error like miss typed numbers or wrong use of the system can
arise. (Keydifferences.com, 2018)

 

Conclusion

Computerised accounting systems are a
better alternative to manual accounting systems but have drawbacks when it
comes to the technical aspects of prior knowledge of accounting and computer
skills to operate and authorise a report for a company. Computerised accounting
systems have helped advance major corporations with solving and assessing their
financial data and position for day-to-day activity and forecasting their future
performance as a business.

 

Therefore, by embracing the digital
revolution, we have vastly helped the industries with accounting but it still
needs an accountant to check the credibility of the data when there is a fault
in balancing. Thus the computerised accounting system has simplified the
manual accounting work load and repetitive methods.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

List of References

 

Andrew Thomas, Anne Marie Ward
(2015). Introduction to Financial Accounting. Europe: McGraw-Hill
education. 270-272.

 

Sage.com. 2018. Sage Online. 14
January 2018. Available from: https://www.sage.com/en-gb/products/sage-one/. Last
visited: 14/01/18

 

Keydifferences.com. Surbhi
S.
2018. Key Differences. Online. 14 January
2018. Available from: https://keydifferences.com/difference-between-manual-and-computerized-accounting.html.
Last visited: 14/01/18

 

WORD COUNT: 808