Comparison between manual and computerized accounting

Accounting is a basic slogan of every company. Without the practice of accounting, it is difficult to be effective in your business. It basically helps you monitor the transactions taking place and ensure that all the spending makes sense. Accounting will help you reduce unnecessary expenses and increase the profit scale of the company. All companies use the same transaction capture strategy to maximize profits with minimized expenses. Billing can be done either manually or via the billing software. We will discuss the advantages and disadvantages of manual accounting and computerized accounting in this article.

In general, the accounting cycle has specific steps of activities. Recording of all transactions as a “journal”. Posting to G/L accounts. Preparing the trial balance sheet, making adjustment entries, preparing the adjusted trial balance sheet, preparing financial statements and proper disclosures, posting closing entries and preparing the balance sheet. It’s all about accounting here. It’s not a big deal to do this sequential process, but it gets dramatically hectic when there are thousands of transactions.

Let’s focus here on the main topics of manual accounting. Paper works are involved in manual accounting. All accounting activities would be done manually on paper. Obviously it would take a lot of time and resources for the large organization. Computerized accounting saves a lot of time as the employee has to record the transactions and all other calculations are done automatically or on demand by the software. Computerized accounting provides accurate results for the precise report, but some software requires a lot of time and resources as manual accounting is required. Therefore, it is not easy to decide which software would work faster and more economically. The best computerized accounting software is very expensive. On the other hand, computerized accounting could process thousands of calculations at the same time while manual accounting takes a lot of time to do it. Even then, we can’t say that manual accounting doesn’t bring benefits. Manual accounting can be accomplished with cheap labor and resources. It is reliable as it is done manually with minute-long observations. You don’t have to rely on the machines.

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The main benefit of computerized accounting is speed and accuracy. We can have a simple backup and restore system. All data and information is backed up. Disadvantages include high cost, updating the system, special training of staff, relying only on the machines and reduced employment.

Both computerized and manual accounting have advantages and disadvantages. They can only be differentiated in terms of cost, speed and mobility. It can be implemented according to the size of the company. Small and medium-sized companies prefer manual accounting due to the low costs. They could employ high quality accountants and handle the day-to-day activities, or simply outsource their accounting tasks to an outsourcing company. Large companies rely entirely on computerized accounting as it provides fast and accurate results. It would be really helpful for them to have the accounting records without any mess.