Comparison between manual and computerized accounting

Accounting is a fundamental watchword of any business. Without accounting practice, it’s hard to be effective in your business. Basically, it helps you monitor the transactions that occur and make sure that all expenses are meaningful. Accounting helps you reduce unnecessary expenses and increase the profit scale of the business. All companies implement the same strategy of recording transactions to achieve maximized profit with minimized expense. Accounting can be done manually or using accounting software. We are going to discuss about the advantages and disadvantages of manual bookkeeping and computerized bookkeeping in this article.

In general, the accounting cycle has certain steps of activities. Record all transactions as “Daily”. Posting them in ledger accounts. Prepare trial balance, make adjusting entries, prepare adjusted trial balance, prepare financial statements and appropriate disclosures, post closing entries, and prepare balance sheet. This is all about accounting. It’s not a big deal to carry out this sequential process, but it gets dramatically hectic when there are thousands of transactions.

Let us focus here on the main problems of manual accounting. Paper jobs are involved in manual bookkeeping. All accounting activities would be carried out 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 other calculations would be done by the software, either automatically or on request. Computerized accounting provides accurate results in the accurate report, but some software is time and resource intensive as it requires manual accounting. 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 while manual accounting takes a lot of time to do so. Even then, we cannot say that manual accounting does not provide benefits. Manual accounting can be handled with cheap labor and resources. It is reliable since it is done manually with observation records. You don’t have to depend on machines.

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

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

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