Manual vs Computerized Accounting Essay Example

software, the accounting cycle becomes more efficient. The computer automates entry journalizing, calculations, and form preparation, tasks that an accountant would typically perform manually when maintaining manual accounting records.

The accounting cycle for Peachtree Complete Accounting, for instance, involves the following steps: Creating a new company, analyzing transactions, Journalizing entries, posting to the edger, printing the unadjusted general ledger trial balance, reconciling accounts, journalizing and posting adjusting entries, printing the general ledger trial balance, printing the financial statements, changing the accounting period, and interpreting the accounting information (Yacht, 2008, p. 45). In a computerized accounting system, data is manually entered into the computer, while most calculations are automated for the user.

Computerized accounting systems offer several advantages. They enhance the speed and efficiency of the accounting process by automating tasks such as journalizing and calculation. This automation reduces the need for manual labor. Additionally, computerized systems automate the summation of transactions and enable quick and easy printing of financial statements. While data entry errors may still occur, they are easier to identify in a computerized system, and there is no risk of transcription errors since the computer handles the transcription process.

Computerized accounting systems are beneficial for large companies with a high transaction volume as they efficiently manage numerous transactions. Additionally, these systems save time by generating financial statements at any stage of the accounting cycle, unlike manual accounting which is more time-consuming. Nevertheless, it should be recognized that computerized accounting systems also have their disadvantages.

Computerized accounting systems may be too costly for small businesses and not within their budget due to limited start-up funds. Moreover, depending on computers for accounting poses challenges such

as power outages, virus risks, data security concerns, and the possibility of computer fraud. Additionally, I hold the opinion that computerized accounting systems lack transparency in comparison to manual accounting. While it is possible to access journal entries and the general ledger by drilling down, they often prove perplexing to individuals who are not well-versed or acquainted with accounting principles.

Computerized accounting, which requires specialized computer knowledge, is more costly in terms of employee expenses compared to manual accounting. This becomes especially important as many companies currently delegate their accounting tasks to countries like India with lower labor costs. In the article "Cost Savings from Computerized Accounting are Not What They Should Be" (Lamely, 2006), the author emphasizes the significant learning curve associated with effectively using the software and suggests that unauthorized accounting may not necessarily be cheaper or less error-prone than manual accounting. Despite these differences, both manual and computerized accounting systems have a common starting and ending point: business transactions and financial statements and reports that adhere to accounting principles and double entry accounting. Each system has its own advantages and disadvantages, but neither is inherently superior or inferior to the other. Ultimately, businesses must decide whether to implement a manual or computerized accounting system.