DIFFERENCE BETWEEN MANUAL AND COMPUTERISED ACCOUNTING SYSTEM

Owners and other stakeholders of any business, whether large or small, want to know whether the business is making a profit or not. Many small businesses do their accounting manually and they are happy with this setup. Others may be considering using a computerized system, since accounting software is also affordable these days. Manual and computerized accounting systems perform basically the same processes; the accounting principles and concepts are the same with differences lying in the mechanics of the process. Let us now see the difference between these two:




 

Speed

The main difference between manual and computerized systems is speed. Accounting software processes data and creates reports much faster than manual systems. Calculations are done automatically in software programs, minimizing errors and increasing efficiency. Once data is fed into the system, one can create reports literally by pressing a button in a computerized system.

 

Cost

Another difference between manual and computerized systems is cost. Manual accounting with paper and pencil is much cheaper than a computerized system, which requires a machine and software. Other expenses associated with accounting software include training and program maintenance. Expenses can add up fast with costs for printers, paper, ink and other supplies. However, manual accounting requires more staff. Therefore, more expenditure on salaries/wages in case of manual accounting.

 

Backup

A third difference between manual and computerized systems is the ease of backup of a computerized system. All transactions can be saved and backed up, in case of fire or other mishap. You cannot do this with paper records, unless you make copies of all pages - a long and inefficient process.

The following table makes a further attempt to explain the difference between the manual and computerized accounting systems:

 

BASIS FOR COMPARISON

MANUAL ACCOUNTING

COMPUTERIZED ACCOUNTING

Meaning

Manual Accounting is a system of accounting that uses physical registers and account books, for keeping financial records.

Computerized Accounting is an accounting system that uses an accounting software, for recording financial transactions electronically.

Recording

Recording is possible through book of original entry.

Data content is recorded in customized database.

Calculation

All the calculation is performed manually.

Only data input is required, the calculations are performed by computer system.

Speed

Slow

Comparatively faster.

Adjusting entries

It is made for rectification of errors.

It cannot be made for rectification of errors.

Backup

Not possible

Entries of transactions can be saved and backed up

Trial Balance

Prepared when necessary.

Instant trial balance is provided on daily basis.

Financial Statement

It is prepared at the end of the period, or quarter.

It is provided at the click of button.

 

Post a Comment

Previous Post Next Post