Introduction to Computerised Accounting
- Definition: Computerised accounting involves using computers and software to manage financial data for recording, summarising, and decision-making.
- Benefits:
- Efficiency: Faster data processing and report generation.
- Accuracy: Reduced errors due to automation.
- Cost Savings: Lower operational costs compared to manual accounting.
- Backup: Easy data backup and recovery.
Difference Between Manual and Computerised Accounting Systems
1. Definition:
- Manual Accounting: Uses physical books and ledgers.
- **Computerized Accounting**: Uses software for managing financial transactions.
2. **Ledger Accounts**:
- **Manual**: Entries are made manually.
- **Computerized**: Entries are processed automatically by the software.
3. **Trial Balance**:
- **Manual**: Prepared manually from ledger balances.
- **Computerized**: Automatically generated by the software.
4. **Adjustment Entries Record**:
- **Manual**: Adjustments and postings are done manually.
- **Computerised**: Adjustments are automatically posted.
Advantages and Disadvantages of Computerised Accounting Systems
Advantages:
1. **Automation**: Reduces manual tasks, saving time.
2. **Accuracy**: Minimizes errors in calculations.
3. **Data Access**: Easier access to updated financial data.
4. **Easy Data Representation**: Data can be viewed in various formats, like charts and graphs.
5. **Reliability**: Accurate and consistent data.
6. **Scalability**: Manages growing transaction volumes easily.
7. **Speed**: Quick data processing and report generation.
8. **Security**: Data can be securely stored and backed up offsite.
9. **Cost-effective**: More efficient than paper-based systems, saving time and resources.
Disadvantages:
1. **Cost of Software**: Initial purchase and maintenance can be expensive.
2. **Reliance on Computers**: Vulnerable to technical issues like crashes or viruses.
3. **Fraud**: Increased risk due to potential system vulnerabilities.
4. **Human Error**: Mistakes in data entry can occur.
5. **Training**: Requires learning to use the software, which can be time-consuming.
6. **Time**: Entering data might be slower compared to manual methods for some users.
Considerations While Choosing Accounting Software
- **Features**: Match the software features to your business needs.
- **Compatibility**: Ensure the software is compatible with your existing systems.
- **User-Friendliness**: Select software that is easy to use and learn.
- **Cost**: Consider the total cost of ownership, including purchase and maintenance.
- **Support**: Availability of customer support and training.
- **Scalability**: Ability to handle growing amounts of data and users.
- **Security**: Robust security features to protect financial data.
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