Accounting
In accounting, there is the recording, processing, and presentation of financial transactions to generate financial statements vital to different stakeholders in making decisions about an organization, whether short-term decisions or long-term decisions. Traditionally, manual accounting was prevalent through the use of vouchers, registers, and accounting books. However, through the emergence of technology, accounting has been computerized, ensuring speed, accuracy, and convenience. This essay compares and contrasts a manual accounting system with a computerized accounting system for processing customer transactions.
Despite the differences between manual and computerized accounting systems, they are both based on the same accounting conventions, principles, and concepts. The significant difference is in the sense that, in recording transactions in a manual system, pen and paper are used. In contrast, in the computerized accounting system, transactions are recorded electronically through computers and the internet.
There are differences between manual and computerized accounting systems. Firstly, in manual accounting, an organization uses physical registers such as vouchers and accounting books to keep an organization’s transactions. In contrast, computerized accounting records an organization’s transactions through the use of accounting software or package (Ainsworth & Deines, 2019). Another difference between the two systems is that a manual system can record transactions through the book of original entry, while in a computerized system, customized databases are utilized in recording data content. Besides, transactions in a manual system are performed manually, while in a computerized system, a computer system performs the transactions. On the aspect of speed, a manual system is slow, whereas a computerized system is faster.
In a manual system, adjustment entries are made for rectification of errors, whereas in a computerized system. The adjustment entries are not made unless the error is the error of principle. Also, there is no backup of the data in a manual system, whereas in a computerized system, transactions can be saved and backed up, and this can serve as evidence in case the original transaction recorded is lost. When necessary, a trial balance is prepared in a manual system, whereas in a computerized system, there is a daily provision of a trial balance (Ainsworth & Deines, 2019). Additionally, in a manual system, financial statements are prepared at the end of the period or quarterly, whereas in a computerized system, it is provided on the click of a button. The customer accounts in the accounts receivable subsidiary ledger are majorly updated from the control accounts, whereas the customer center updates the correct and corresponding accounts majorly into the general ledger.
References
Ainsworth, P., & Deines, D. (2019). Introduction to accounting: An integrated approach. John Wiley & Sons.