Financial systems Essay Example

Moreover, she uses the list to prepare the cash receipts journal and update accounts receivable in the general leger system. This indicates that Ms Joan performed her tasks manually, both in the preparation and updating process.

The steps involved in a Manual Accounting System are as follows.

Advantages of Manual Accounting

Manual accounting systems offer various benefits and advantages. The ledgers can be easily reviewed, and accountants can make simple changes if necessary. Additionally, individual accounts can be easily accessed due to the systematic order of information in each ledger. Accountants also have the advantage of physically handling each ledger and making notes in client accounts regarding any issues that require clarification or corrections. One major advantage is the independence from machines. This is because machines rely solely on logic and cannot be trusted if anything goes wrong. Even when using a computerized system, errors can still occur when people input the data, and the computer may not be able to detect them.

When dealing with a new employee who is not familiar with computers and prefers using manual accounting systems, the difficulty level increases. Moreover, it is essential to have experienced and skilled personnel. For example, an auditor employs their expertise and knowledge to conduct a comprehensive examination of all documents.

These workers have undergone training supervised by management to prevent any errors in the preparation of financial statements. Additionally, the authenticity of the individual entering the data can be verified through their handwriting. By analyzing an individual's handwriting, it becomes convenient for a manager to identify the person responsible for rectifying any mistakes in these documents. This person will be held accountable for errors or fraud. Finally,

the last advantage is straightforward and easily recognized. An auditor can easily monitor all transactions, including journals, ledgers, cash books, and more because there are hard copies of all records.

Furthermore, ciphering figures, inserting inside information, and writing down numbers and minutes assist the mind in easily recalling all the information and figures, instead of typing them into a computerized accounting system. This suggests that Ms. Joan may have a better understanding of the process through this manual accounting system, as every step is handwritten on paper.

Disadvantages of Manual Accounting

Meanwhile, there are several drawbacks for Bintang Sdn Bhd to consider when maintaining a manual accounting system. One disadvantage is that it can be time-consuming, as an auditor must manually transfer numbers from one report to another. For example, Mr.

Peter asks Ms Joan to review all of the documents from Bintang Sdn. Bhd. Yet, the Head of Internal Audit Department informs Peter that Joan has consistently made several posting mistakes in the accounting systems that impact the company's financial statement. She does this by inflating sales figures, entering incorrect credits for accounts receivable, and overstating receivables. This creates difficulty for the auditor to make corrections as they must take the time to re-examine all the accurate figures and details manually.

Computerized Accounting

Computerized accounting involves entering transactions into a computer, which then automatically or upon request processes the other steps of the accounting cycle. However, this simplified view ignores the comprehensive nature of the course, which includes not only sales and purchases but also calculations for depreciation, premiums, rewards, dividends, and more. While computers provide precise calculations and intelligent reports, they require significant time, resources, and effort. Determining the

most efficient and cost-effective accounting method is a challenge. Manual accounting relies on qualified accountants to record business transactions while computerized accounting requires skilled accountants knowledgeable in specific software applications that can increase costs. Despite faster calculation capabilities of computer software systems, they lack knowledge about required information unless explicitly explained. Additionally, a well-functioning computerized accounting system can be expensive with costs ranging from thousands to millions of dollars depending on an organization's complexity and size.

Computerized accounting is a more efficient internal control system that operates within a specific time frame. It can manage multiple indices simultaneously and promptly alert the relevant departments or employees if any inconsistencies occur, which is in contrast to the time-consuming nature of manual control.

Moreover, computerized accounting offers several advantages over manual accounting. Accountants can quickly process information, easily verify calculations, and reduce the risk of errors. Accounting systems can also be customized for different industries, allowing accountants to use predefined templates for their general ledger. Additionally, storing several years' worth of financial data is easier with computerized accounting, as it allows accountants to review past year's information without having to search through numerous paper ledgers.

Computerized accounting systems have several advantages, including saving time. Unlike manual systems, computerized systems are faster because users only need to input information into the computer. The computer can then perform calculations and generate reports, invoices, or credit notes with a simple button press. This allows accountants to focus on other tasks while still saving time. Moreover, using a computerized accounting system enhances speed and accuracy. The primary advantage of this system is its ability to carry out processing at a quicker pace, in a

more systematic manner, and with greater precision compared to manual accounting systems.

One of the main benefits of a computerized system is its ability to generate reports instantly, such as client statements or more advanced analyses like cash flow analysis. Additionally, using a computer ensures that computational errors are unlikely to occur, unless there are exaggerated, hidden, or misrepresented figures. Therefore, computerized accounting systems provide accuracy due to the software, such as Microsoft Excel, accurately calculating all figures.

Disadvantage of Computerized Accounting System

The first drawback is the high cost associated with implementation.

This is because a system must be updated, electrical charges, developing cost for staff to utilize the system efficaciously and many more. For illustration, Mr Peter must supply full preparation to Ms Joan in term of scrutinizing cognition and accomplishment and using it to the system. The intent of preparation is to avoid mistakes from happening. Besides that, computerized accounting system can be affected by virus. There are so many viruses accessible presents that it may destruct the package and files in the system including informations and dealing. All the files in the system will be lost and it will impact the fiscal statement of Bintang Sdn Bhd every bit good.

Additionally, system disruptions such as power failures or crashes can result in data loss. Moreover, the financial statement of Bintang Sdn Bhd may be impacted by computer hackers who gain unauthorized access to files and make changes.

Decisions

As a decision, Bintang Sdn. Bhd should utilize the computerized accounting system as it offers numerous advantages to the company.

In recent years, the majority of companies have adopted computerized accounting systems to manage and display their financial information. This system

allows for accurate entry of business transactions and generates financial reports quickly for management review. Furthermore, it eliminates the need for manual accounting processes, which can be time-consuming for auditors who must carefully examine all the details and figures. By contrast, a computerized system automatically calculates figures using software like Microsoft Excel. As a result, auditors can work at a slower pace when reviewing documents and preparing financial statements.

The maps of manual accounting have evolved, but their relevance persists. Accountants ensure the accuracy and authenticity of financial report data. They also uphold the Generally Accepted Accounting Principles (GAAP) and other regulatory mandates.