Brief Summary After several years in Navy and upon returning to civilian life, Sarah Bates sought for a small business. He then finally located a small boatyard for sale in a town on the coast of Maine. Since the business was somewhat larger than she could finance alone, she had borrowed the additional funds required and mortgaged the property as security. Bates realized the need for adequate accounting records to manage the business successfully.
She needs to know what kind of accounting records should be kept and what kind of financial and cost information should be developed to control operations and to make the proper charges to customers for services rendered.
Statement of the Problem: What kind of Accounting System should be developed be able to control operations and to make proper charges to customers for services rendered? Objective: Unavailability of
...an effective Accounting System Areas of Consideration: The records on hand were for cash receipts and disbursement only which points to a limited record available.
There is no IT equipment installed or established in the business that could be a factor in proposing a new system. There is a problem in the availability of Accountant to handle the accounting records and task in the business. Since the business is just starting, there could be no enough funds to invest for the other equipment of Automated System. Alternative courses of Action: Hire an accountant to handle the accounting job manually since the business is just starting.
Advantages:
- It is a comparatively cheap workforce and resource and not costly to implement.
- There are many skilled workers(accountants) available who could perform the job.
- Independence from the machine. Disadvantages
1. Manual records are subject to greater human error along the way. 2. Manual records are easier to be falsified, modify, alter or vanish, as compared to computerized records which are safe when using passwords, firewalls, and back-ups.
Faster and efficient in processing of information most specifically in generating Accounting reports for management. Since all transactions are recorded in the computer and generation of reports can be done in a faster and efficient way. No more manual processing of data, since all transactions are posted to the various ledgers/accounts automatically.
Many types of useful reports can be generated for management to make decisions. With the larger reductions in the cost of hardware and software and availability of user-friendly accounting software packages, it is relatively cheaper in the long run than maintaining a manual accounting system. Automatic generation of accounting documents like invoices, cheques, and statement of accounts
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