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3/5/2013Essay 4: Comparison & ContrastRevision
#20 Lagman, Alyssa Noreen R.AT102
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The Difference between Manual Accounting and Electronic Accounting
However, are manual and computerized accounting systems so totally different,
or is any of the systems in an absolutely advantages position, or will a manual
accounting system eventually totally disappear? In actuality, it is hardly possible to give
a positive answer on any of these questions. In fact, it should be said that bothaccounting systems have its advantages and disadvantages which become obvious on
closer analysis.
First of all, it should be said that, at first glance, a manual accounting system
creates a number of inconveniences. For instance, in manual accounting system, each
of the steps in the accounting cycle is performed by hand. Practically, this means that
transactions are entered into a journal and then posted to the ledger. In such a way,
financial statements are derived from many manual computations from ledger balances.
Obviously, such a complexity of the process and computations may sound quite
shocking for the supporters of the mass implementation of computerized accountingsystems since they simplify substantially the accounting cycle and the process of
computation because, firstly, each of the steps in the accounting cycle is made
automatically by the computer that naturally decreases the time spent on this process.
Than all information may be collected and centralized without spending time on
entering of transactions into a journal and then posting them to a ledger. In fact, all
these operations are automotive and centralized due to efficient work of computers and
software. Finally, a computerized accounting system does not need time on many long
lasting and, consequently, time wasting, manual computations from ledger balances.
Naturally, from such a point of view, a computerized accounting system seems tobe absolutely better, more efficient and more reliable than a manual accounting
systems since there is little room for errors because of low influence of human factor in
the accounting processes. Consequently, one may wonder how and what is more
important why then a manual accounting system still persists and is still applied.
However, the answer on this question is also quite simple. First of all, it should
be said that small businesses still use a manual accounting system and the main reason
is the basic principle of the efficiency of an accounting system, i.e. high benefits and
low costs of information. In this respect, it should be said that, even though a manual
accounting system is much more complicated and time wasting, this system is
substantially cheaper and does not need additional training of a personnel to be applied
efficiently. This is why small businesses which, as a rule, does not have exorbitant
benefits, attempt to minimize costs on accounting system in such a way. Instead, larger
corporations, for which time is crucial and accounting is too difficult to be done
manually with sufficient reliability and correctness, prefer to use a computerized
accounting system which costs are substantially overweighed by benefits from its use
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because of short time spent on accounting processes, reliability and accurateness of
information received.
Finally, a manual accounting system is still important and essential because, in
order to understand what a computerized accounting system does, one must
understand how a manual accounting system works. Not surprisingly that many smallbusinesses, which begin from a manual accounting system, gradually convert to a
computerized accounting system as business grows. In fact, it is a natural and
inevitable process since the larger business means more information to be analyzed in
shorter terms. As a result, the only logical choice for a growing business is to convert
from a manual accounting system, when all its functioning is understandable, to a
computerized accounting system, which efficiency is obviously higher in larger
companies.
Thus, taking into account all above mentioned, it is possible to conclude that
nowadays both manual and computerized systems co-exist. However, it is hardly
possible to say that they compete with each other because they are basically applied in
different companies. To put it more precisely, a manual accounting system is basically
used in small businesses, while a computerized accounting system is use in larger
companies. At first glance the use of a manual accounting system seems to be a bit
paradoxical since it is less efficient, slower and more complicated than a computerized
one. However, the explanation of such a paradox will simple: higher costs of a
computerized accounting system and necessity to learn the principles of work of an
accounting system that is easy to do with a manual accounting system. Consequently, a
manual accounting system will hardly disappear in the nearest future though the role
and spread of a computerized accounting system will keep growing.