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The control problems that come with manual accounting systems

Features, Advantages and Other Details Article shared by: Read this article to learn about the need, features, requirements, advantages, disadvantages and problems faced in computerized accounting system. Need for Computerized Accounting: The need for computerized accounting arises from advantages of speed, accuracy and lower cost of handling the business transactions.

The computerized accounting system is capable of large number of transactions with speed and accuracy.

  • Departures from budget can then be investigated and the reasons for the differences can be divided into controllable and non-controllable factors;
  • Like all management tools, the chapter highlights the need for detailed information, if the technique is to be used to its fullest advantage;
  • Frequent repair and power failure may affect the accounting work very much.

It is capable of offering quick and quality reporting because of its speed and accuracy. Reduction in Paper Work: The requirement of books and stationery and books of accounts along with vouchers and documents is directly dependent on the volume of transactions beyond certain point. There is a dire need to reduce the paper work and dispense with large volume of books of account. This can be achieved with the help of computerized accounting system.

The reporting is flexible in computerized accounting system. It is capable of generating reports of any balance as when required and for any duration which is within the accounting period. There are accounting queries, which are based on some external parameters.

  1. Like all management tools, the chapter highlights the need for detailed information, if the technique is to be used to its fullest advantage.
  2. Accounting software allows easy alteration of data. It ensures control over accounting work and records.
  3. The accounts prepared with the use of computers are usually uniform, neat, accurate, and more legible than manual job. There is no right or wrong decision.
  4. When there is a system crash [hard disk crash], there is high risk of losing the data available on the hard disk drive at any point of time. Marking Guide Grading After achieving competency we then grade your performance in the unit; this gives you the opportunity to have the level of your performance formally recognized against industry standards and employability skills.

Such an exercise would be quite difficult and expensive in manual accounting system. Computerized accounting system offers online facility to store and process transaction data so as to retrieve information to generate and view financial reports.

Computerized Accounting System: Features, Advantages and Other Details

The information and reports generated are accurate and quite reliable for decision-making. In manual accounting system, as many people do the job and the volume of transactions is quite large, such information and reports are likely to be distorted and unreliable and inaccurate. This system is highly secured and the data and information can be kept confidential, when compared to manual accounting system. The system can cope easily with the increase in the volume of business.

It requires only additional data operators for storing additional vouchers. Special Features of Computerized Accounting System: It leads to quick preparation of accounts and makes available the accounting statements and records on time.

It ensures control over accounting work and records. Errors and mistakes would be at minimum in computerized accounting. Maintenance of uniform accounting statements and records is possible. Easy access and reference of accounting information is possible. Flexibility in maintaining accounts is possible.

It involves less clerical work and is very neat and more accurate.

It adapts to the current and future needs of the business. It generates real-time comprehensive MIS reports and ensures access to complete and critical information instantly. Requirements of the Computerized Accounting System: A good accounting framework in terms of accounting principles, coding and grouping structure is a pre-condition.

A well-conceived and designed operating procedure blended with suitable operating environment is necessary to work with the computerized accounting system. The computer accounting is one of the database-oriented applications, wherein the transaction data is stored in well-organized database.

The user operates on such database using the required interface. And he takes the required reports by suitable transformations of stored data into information.

Part B: Course Detail

Hence, it includes all the basic requirements of any database-oriented application in computers. Advantages of Computerized Accounting: The accounts prepared with the use of computers are usually uniform, neat, accurate, and more legible than manual job. Computer is a labor and time saving devise. Hence, the volume of job handled with the help of computers results in economy and lower operating costs.

Computer brings speed and accuracy in preparing the records and accounts and thus, increases the efficiency of employees. From the management point of view, greater control is possible and more information may be available with the use of computer in accounting. It ensures efficient performance in accounting work. Computerized accounting ensures accuracy in accounting records and statements.

Course Title: Set up and operate a computerised accounting system

It prevents clerical errors and omissions. Computerized accounting reduces the monotony of doing repetitive accounting jobs, which are tiresome and time consuming. Computerized accounting facilitates standardization of accounting routines and procedures.

Therefore, standardization in accounting is ensured. While doing mathematics with computers, errors are virtually eliminated unless the data is entered improperly in the first instance. Disadvantages of Computerized Accounting: The introduction of computers in accounting work reduces the number of employees in an organization. Thus, it leads to greater amount of unemployment. A small firm cannot install a computer accounting system because of its high installation and maintenance cost.

To be more economical there should be large volume of work. If the system is not used to its full capacity, then it would be highly uneconomical. Computer system calls for highly specialized operators. The availability of such skilled personnel is very scarce and very costly.

Frequent repair and power failure may affect the accounting work very much. Computers are prone to viruses. The user, for using computer accounting software, needs to understand the concepts of the software. Hence, he should undergo proper training. If the system is not available [due to hardware failure or power cut], it would be difficult to verify the accounts.

A full-fledged computer system with a printer is required to operate the computerized accounting system.

Manual Accounting Systems - advantages, disadvantages and overview of Manual accounts proceedures

Most small organizations may not afford to have such facility with necessary software. When there is a system crash [hard disk crash], there is high risk of losing the data available on the hard disk drive at any point of time. It would be highly painful, if the problem occurs at end of the financial year, when the financial statements should be ready.

Backups of the data should be done regularly so that, when the data is lost, it can be restored from floppies [backups].

  • Flexibility in maintaining accounts is possible;
  • Budgetary control methods a Budget;
  • You should be able to demonstrate a thorough understanding of double entry bookkeeping principles and procedures involved when processing financial transactions and preparing reports;
  • Prone to human error More suited to smaller businesses Records susceptable to perils such as fire and water Disaster recovery plans harder to implement Can take longer Not paricularly suited to environments where there are a large volume of transactions Before deciding whether your business is better suited to a manual accounting system or a compuristed accounting system, careful consideration should be given to your own preferences;
  • From the management point of view, greater control is possible and more information may be available with the use of computer in accounting.

Regular print outs of the system information would be useful as manual records. Accounting software allows easy alteration of data.

If a voucher is wrongly placed in a wrong head, it would be very difficult to sort out and bring back the voucher.

A good voucher management is very essential.