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Accounting Systems
There are many ways in accounting to get the job done right but two basic approaches give accountants a foundation to work upon. The purpose of this essay is to examine the differences between manual and computerized accounting systems. This essay will explain the history and development of both types of systems and will break down the advantages and disadvantages of them as well.
Explanation and History of the Manual ACC System
Before computer technology, everything was manual. Things were done by the methods that were available at the time. Manual accounting systems are the same way and have developed in similar fashion. Manual accounting systems are methods in which each step within the accounting process is done and cycled by hand (p.302). Since computer systems are based on manual systems, these systems are the base line information that is necessary to understand the fundamentals of accounting procedures. Manual accounting is mainly conducted on ledgers and journals in accordance with specific guidance from the firm or client.
Manual accounting procedures include several key actions. These tasks include journalizing the transactions, posting them to ledger accounts, preparing trial balance, making adjustment entries, preparing adjusted to end-of-period trial balance, preparing financial statements and appropriate disclosures, journalizing and posting the closing entries, and preparing after-closing trial balances.
The transactions are recorded in appropriate journals with transaction data, affected accounts' titles, debit and credit of each affected account and explanation specified...
These steps are necessary for each transaction. All the journal records must be posted to the ledger on a periodic basis for a given time interval which is a group of accounts put together and classified (assets, liabilities, revenue, expenses and equity). In other words general ledger summarizes all the transactions within a period of time. In addition there is a subsidiary ledger can be used, which is a more detailed source, where individual items comprised (inventory, accounts payable and accounts receivable). General ledger contains controlling accounts which summarize the content of subsidiary ledger.
Advantages of the Manual ACC System
Manual accounting systems have some distinct advantages. The most important advantage is the true understanding of how and where the money flows in an organization, the true essence of accounting. Practicing the fundamentals of accounting will make better and more accurate reports and will increase the value of any accountant. Being away from a computer also has some advantages just as a change of pace. Other advantages include a cheap workforce and resources, reliability, independence from machines, skilled workers availability
Disadvantages of the Manual ACC System
Although manual accounting systems have positive aspects, there are also considerable disadvantages to this process. The amount of time that it takes to do many of the tedious calculations may not always be the best idea if time is an issue. The work is also very repetitive and can drain a person's energy rather quickly. Human error also contributes to the negative aspect of this…
References
Weygandt, J. Kimmerl, P. Keiso, D. (2008). Accounting Principles, 9th Edition.
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