advantage and disadvantage of manual system and computerized system

Many reports are automatically updated and instantly available. Staffing Neither manual nor computerized accounting systems take the advantage when it comes to staffing. It can be costly to staff qualified accountants to complete manual accounting processes, but it can also be costly to staff accountants familiar with specific computerized accounting software and programming. Cost When it comes to cost comparison, the advantages of manual accounting systems are clear. Computerized systems can cost millions of dollars to purchase, implement and maintain. It may be necessary to purchase updated software with some regularity. References University of Nebraska Cooperative Extension: Understanding Common Accounting Transactions for Small Business Owners Understand Accounting: Cost Savings From Computerized Accounting Are Not What They Should Be College Accounting Coach: What Are the Advantages And Disadvantages of Computerized Accounting Systems Photo Credits accounts image by Alexey Klementiev from Fotolia.com About the Author Morgan Rush is a California journalist specializing in news, business writing, fitness and travel. He's written for numerous publications at the national, state and local level, including newspapers, magazines and websites. Rush holds a Bachelor of Arts from the University of California, San Diego. What Is LF in Accounting. Yet double-entry manual accounting proves robust enough that many accounting applications re-create the features of the double-entry system within their software, such as the power and natural error-correction potential. When you weigh the options, manual entry systems may still have a place in your offices. How Manual Accounting Works Any contemporary accounting system records transactions relating to business activity with a view to communicating your company’s financial health to stakeholders, whether they are staff, bank managers or private investors.

• advantage and disadvantage of manual system and computerized system, advantage and disadvantage of manual system and computerized system, advantage and disadvantage of manual system and computerized systems.

Limitations of Accrual Accounting Most companies use manual or computerized accounting to track expenditures and income. Assets, liabilities, revenue, expenses and equity must be documented and transferred to a general ledger containing the company’s financial details. Such information may be analyzed to help business owners make future financial decisions, using the advantages of either manual or computerized accounting. Time Computerized accounting has the advantage of increased efficiency and time management when compared with manual accounting. Computers may more rapidly perform accounting functions or assessments than manual accounting systems, once data has been entered into the system. Accuracy Computerized accounting has the advantage of higher accuracy when compared with manual accounting, according to the College Accounting Coach. The potential for human error is greater when employees are manually completing accounting procedures. Reliability The advantages of manual or computerized accounting systems may be equal when it comes to reliability. But with modern backup systems and increased functionality, the disadvantage of reliability in computerized accounting may be lessened. Creativity in Analysis Although computerized accounting systems are adept at rapidly computing complex analyses of accounting transactions and reports, the subtlety and focus of an analysis’ conjecture or hypothesis depends on the person operating the system. In this view, manual accounting may have an advantage over computerized accounting systems. Without the nuance and experience of an actual person, computerized accounting systems lose their potential for sophisticated analysis. Additionally, analysis may be hampered or obstructed by software design. Reporting The advantages of computerized accounting include fast, complex reporting. Computerized systems can produce invoices, purchase orders and other documents more quickly.

Many accounting programs use a double-entry method, but second entry is created automatically. While this won’t stop a wrong number from being entered, it does eliminate discrepancies between the first and second entries. Disadvantage: Potential Loss of Physical Copies While digital data can be corrupted, effective backups can protect data, including copies off-site, such as in cloud server storage. Journals and ledgers, being physical books, are prone to loss. Theft or fire could mean that all of a company’s accounting data is lost. Duplicating and storing the general ledger off-site can be a time-consuming task, compared with many digital storage options. Disadvantage: Knowledge of Accounting Procedures Unlike many commercial software packages, manual accounting system aren’t optimized for ease of use, nor can you expect client support or proprietary help. A bookkeeper or accountant will be necessary to start up and maintain your manual accounting system. References Experience: Manual Accounting Versus Computerized Accounting Simple X Payroll: Manual vs. Computerized Accounting Bizmanualz: How Does an Accounting System Work. About the Author With degrees in Photography and Recorded Music Production, Scott spent over 20 years as an Operations Manager with Kodak before starting a second career as a freelance content creator specializing in business, accounting and tax topics. Periodicals include FIVE Magazine and Your Business for the Your Magazines Canada group and online clients include TurboTax, Office Depot, Hyundai USA and VISA. www.shpak60.ca Related The Advantages of Manual Vs. Trending Now 1 The Advantages of Manual Vs. You can choose between using a manual accounting system or a computerized one. While computerized systems are convenient, there are some distinct advantages that manual accounting systems can provide.

The systems is separated roughly into four cycles: Revenue Purchase Payroll General Journal Manual accounting systems use physical records, pads of paper and books, onto which transactions are entered by hand. Accounting pages have four or more printed columns and multiple rows, natural divisions for the necessary information, such as date, description and dollar amounts. Numerical entries typically have space for every digit. Journals and ledgers comprise the working and final copies of documents, often with separate books for the various accounts. Cash sales could be one set, for example, while payroll may be another. The results of these working documents are usually combined in the company’s general ledger. Advantage: Error Correction Despite the convenience and market penetration of computer-based accounting systems, manual accounting still offers several advantages that make it a viable alternative. The first is error correction. Double-entry accounting, attributed to Luca Pacioli, a 15 th century Italian, provides a natural way to guard against data entry errors and number transpositions. Every transaction gets entered as a debit in one account, and a credit in another account. Trial balances compare all debits and all credits. If these don’t match, an error is made somewhere in the accounts. Advantage: Data System Errors and File Corruption Computer systems store data in ways that aren’t commonly understood by many users. Opening the wrong file with old data or encountering a data file with digital errors can ruin the validity of your current data. Manual systems use a single file, the ledger, for each account. There’s no other version with similar data that may be confused. Advantage: Always Accessible Power or internet outages won’t prevent you from working on accounts unless you’re thrown into complete darkness. Disadvantage: Data Entry Errors Double-entry accounting in a manual system is laborious, since every transaction must be recorded by hand, twice.

References Experience: Manual Accounting Versus Computerized Accounting About the Author Luke Arthur has been writing professionally since 2004 on a number of different subjects. Arthur holds a Bachelor of Science in business from Missouri State University. OCR Readers The Disadvantages of Spreadsheets How to Import Simply Accounting Into QuickBooks What Are the Functions of Accounting Software Programs for Small Business. Scanners That Convert Documents to Excel Types of Databases in QuickBooks Share on Facebook Many years ago, before the invention of computers, bookkeepers and accountants entered and tallied numbers by hand. A manual accounting system can be as simple as a single-entry ledger or as complicated as a double-entry system that keeps track of a long list of accounts. While any accounting system is as effective or ineffective as the quality of its data, manual accounting systems offer facility and ease but may fall short when it comes to compiling reports and connecting dots. Simplicity and Complexity A sole proprietor who simply wants to do her own books and develop a working understanding of her company's financial activities may not need a double-entry program that transfers debits and credits between theoretical accounts such as equity and accounts payable. Although accountants and business owners interested in gleaning as much information as possible about company finances can choose from sophisticated systems such as Peachtree and QuickBooks, it is difficult to find a computerized single-entry bookkeeping system that provides simple, straightforward information. An accounting pad divided into 12 columns provides a sufficiently clear accounting format for many small-business owners. Usability It is easy to enter information into a manual accounting system, but it can be difficult to distill information and create reports. A bookkeeping program such as QuickBooks can create an income statement in seconds once you select a date range.

Avoid Corrupt Data One of the benefits of using a manual accounting system is that you know your documents will always be available when you need them. This is not always the case when you use a computerized system. When you use a computerized accounting system, many times the data will become corrupted, and you will not be able to access the information any longer. At that point, you could potentially lose years' worth of data that you desperately need for your business. Duplication Mistakes When using a manual accounting system, you do not have to worry about duplication errors. With a computerized system, there is a chance you will duplicate the wrong file and use an outdated set of numbers. With a manual system, you simply have a book with your data in it. Duplicating the data would be a very involved process, which is not likely to occur. This helps you avoid using the wrong data. Making Changes Another advantage of manual accounting systems is that they are easier to make changes to. When you need to change an entry on your ledger, you simply take an eraser and erase the entry. Then you can write the new entry in the blank. When you need to change an entry in your computerized accounting system, you may have to type in a password and find the appropriate file before you can change it. This takes additional time and can create problems. Accessibility Another advantage of using a manual accounting system is that it is easily accessible to anyone who needs the information. For example, business owners may rely on their accounting staff to handle the accounting software and the information in it. If the owners need access to some data in the system, they have to wait on someone from the accounting department to get it for them. With a manual system, they can easily look in the book and get the information themselves.

For people who are comfortable working with an accounting system, either a manual or computerized system would be fine, but the computerized system offers the benefit of speed. If you are old-fashioned and just prefer having the actual paper books, you can use a computerized accounting system just to print out the journal and ledgers, creating the best of both worlds. This process can be completed by either using actual paper journal and ledger sheets or by creating these sheets in a computer program such as Excel. It is considered manual because each transaction is entered into the system individually. The process can be updated any time when there is any change. People should be informed that ERP is better for the organization and staff as well. What are the steps in preparing a budget? Why do you like regular books? Every day, thousands of new job vacancies are listed on the award-winning platform from the region's top employers. Analyses not manually practical, can be easily done by a computer Graphs and Charts also available. Sometimes it premature or totally unjustified one grounds. Then retrieval restoration of data becomes necessary. Computer room should not noisy, too warm, too cold, unpleasant, congested or poorly lighted. Worryingly furniture and sitting arrangement can pain in neck and back Some of them are as under: Pain in neck or back is caused due to improper seating of monitor from our face. There should be a balance between In the darkness, the computer should not be Operated Eyes should be turned aside and closed for a few seconds at the interval of half an hour a vision guard programmer is available to remind this relaxation exercise. It should be loaded in the computer. Specially designed backrest necessary. They should not be excessive. They have rest support.

Today we are rapidly e in the age of information technology, information highways, internet systems super-computers to scan, develop, store, exchange and transmit d many complex systems and for many purposes. It is a Computer Software Package deve10ped by the Environment Protection Agency (EPA) of USA. Therefore continuous integration between departmental MIS should be maintained and updated. Notify me of new posts by email. Learn how your comment data is processed. For those who use computer systems both at home and at work, you may even find that you have opposite perspectives on whether advantages outweigh disadvantages or the other way around when it comes to comparing your home computerized system with your office's system. Computerized systems also offer storage capacity efficiency. For example, a computerized system's hard drive taking up a relatively small amount of space can store a large collection of business or personal documents. A paper-based system, in contrast, would take up at least one, and usually more, file cabinets for storage of the same document collection. In an office setting, computer-based training, or CBT, allows management training flexibility. At the most fundamental level, CBT learning modules incorporate only slide-like pages of text and perhaps some simple questions to test comprehension. At the most sophisticated level, CBT training can incorporate simulations of complex situations that the learner may encounter in her profession. Both the aviation and the medical professions make use of computer-based simulations in some of their training activities. Management also has the flexibility to combine CBT instructional activities with more traditional forms of training, such as instructor-led classroom training. Computerized systems can also give some users a sense of false security that can result in catastrophic losses of massive amounts of present or past work unless the user learns to use proper backup procedures.

However, if you use a manual accounting system, you must review and manually transfer information from each relevant account, enter these figures onto a separate page or spreadsheet and then manually perform the computations. A computer bookkeeping program also makes it less likely to make mistakes. Durability and Permanence Manual accounting systems are more durable than computer systems, because they exist as hard copies rather than digital files that can be wiped out by a computer mishap. However, paper files can also be destroyed as well by fires or floods, and they are easier to misplace. In addition, a digital accounting format gives you the opportunity to back up files by making multiple copies. It takes much longer to photocopy or manually copy a spreadsheet than to save a computer file on a thumb drive or cloud. Transparency Computer files can be modified simply by adding and deleting data. The numbers on the screen show no trace of these changes unless you dig deeper and uncover the date a file was last modified. In contrast, manual accounting systems show evidence of having been changed. If you work in pencil, then erasures are obvious, and if you work in pen you must cross out old entries to make new ones. The difficulty of hiding changes makes it easier to tell when you have changed a manual accounting system and facilitates transparency. References Experience: Manual Accounting Versus Computerized Accounting Yale-New Haven Teachers Institute: Carol L. Cook: How Computers Have Simplified Accounting Business Buy Guide: Accounting Systems: Manual vs. Computerized Writer Bio Devra Gartenstein is an omnivore who has published several vegan cookbooks. She has owned and run small food businesses for 30 years. Compatible Files with Windows Office Mac What Are Five Steps in the Accounting Cycle. Therefore, accounting data is processed faster using a computerized accounting system.

Therefore, these can perform repetitive functions effectively and are highly reliable as compared to human beings. This is called data sharing. This requires special training and cost is incurred to train the staff personnel as specialists. The staff fears redundancy and show less interest in computers. This occurs when no back-up is retained. Similarly, the person who has created the specific program can easily defraud by tempering with the original records. Please check your email and confirm it to read insightful articles, videos and download free eBooks. There was an error submitting your subscription. Please try again. Email Address I would like to receive the free email course.Designed by. Will they get also benefits in Budgeting and planning ? A business also has the option of using a computerized accounting system, keeping their financial records with the aid of a computer and software package. A manual accounting system requires you to understand the accounting process in a way that may be unnecessary with a computerized accounting system. This can be an advantage or a disadvantage, depending on the person doing the bookkeeping; often, a specially trained professional is needed to ensure that accounting is done properly. Since it takes time to generate reports, you may be neglecting other aspects of the business and miss opportunities for growth. However, even with the built-in error detection of computer programs, sometimes it is easier to cross-check journals ledgers in a manual system since you can flip to the pages you need, and even spread the books out on a table if needed. Manual accounting takes longer, but can help a bookkeeper better understand the posting and end-of-period process. This is one reason why accounting students cannot take a computerized accounting course until beginning and intermediate accounting classes are completed. With a manual system, it can take time to locate the information from each book and compile it into a report.

Computer work also has been implicated in a variety of health-related issues, such as skeletal problems, eyestrain and a complex of conditions known as repetitive stress injury — with carpal tunnel syndrome illustrating the best-known repetitive-stress condition. Adults whose work involves heavy computer use to the extent of restricting social interaction may feel isolated or cut off from the world. While home-based workers may suffer from the greatest sense of isolation, this can affect certain employees of traditional businesses, also. A programmer or a quality tester who works alone in a lab or back office environment can also experience such a sense of seclusion. The use of computerized systems has resulted in streamlining such that, for example, the same size organization needs fewer secretaries for the same number of executives or departments than it once did. This loss of many lower- and middle-level jobs, combined with the rapid changes in technology that can fairly rapidly outdate even some jobs within the computer or information technology field itself, has given rise to a perception of lack of job security. Conversely, the prevalence of computerized systems has also resulted in the creation of challenging new jobs, sometimes opening up entirely new professional fields. Are you ready to start the short survey now? Please enable JavaScript in your settings to view the site. Find assistance and support for coronavirus affected businesses and industries.There are a number of issues you should consider when setting up an electronic or manual record keeping system, as each has certain advantages and limitations. Electronic record keeping Most businesses use accounting software programs to simplify electronic record keeping, and produce meaningful reports. There are many other advantages to using electronic record keeping, as listed below.

Advantages Helps you record business transactions, including income and expenses, payments to workers, and stock and asset details. Efficient way to keep financial records and requires less storage space. Provides the option of recording a sale when you raise an invoice, not when you receive a cash payment from a client. Easy to generate orders, invoices, debtor reports, financial statements, employee pay records, inventory reports. Automatically tallies amounts and provides reporting functions. Keeps up with the latest tax rates, tax laws and rulings. Many accounting programs have facilities to email invoices to clients, orders to suppliers, or BAS returns to the Australian Taxation Office. Allows you to back up records and keep them in a safe place in case of fire or theft. Choosing accounting software Your business may require more than one software program to meet all of your tax and legal needs, so it's important to: seek advice from your accountant or financial adviser before purchasing software for record keeping check which accounting software is tax compliant on the Australian Taxation Office website. Electronic backup Set up a secure electronic backup system to ensure records are safely stored and regularly backed up. Daily backups are recommended, particularly for important records. Make sure the backup copies are stored in a separate location to your business in case of fire, theft or a natural disaster. For small businesses, the cheapest backup options are CDs and memory sticks. If your business has large amounts of data, external hard drives are a popular backup option. Cloud backup Cloud computing provides a way for your business to manage your computing resources and records online. The term has evolved over recent years, and can be used to describe the use of a third party for your storage and computing needs.

Cloud backup services are becoming more popular and can be automated for your convenience, but you should make sure the method you choose protects the privacy and security of your business and customers. Learn more about cloud computing. Manual record keeping Some business owners may want to use a simple, paper-based record keeping system. There are certain advantages to using manual record keeping, as listed below. Advantages Less expensive to set up. Correcting entries may be easier with manual systems, as opposed to computerised ones that can leave complicated audit trails. The risk of corrupted data is much less. Data loss is less of a risk, particularly if records are stored in a fire-proof environment. Problems with duplicate copies of the same records are generally avoided. The process is simplified as you don't need to be familiar with how accounting software calculates and treats your information. Streamline your manual record keeping Sort and store all paperwork, receipts and payments in 12 separate months. Keep all original documents and date all correspondence. Record all transaction dates and payment amounts. Save all online financial transactions by month and financial year in your inbox and in a separate folder on your hard drive. Backup all electronic records on an external hard drive or other storage device other than your computer's internal hard drive. Capture nearly all of your income and expenses in statements from both your bank and credit card accounts. Request that all statements and bills be sent on a monthly basis — allowing you to reconcile all financial records each month. For further advice on record keeping, consult your business adviser. Also consider. Read more about financial statements and forecasting. Learn about managing information technology (IT) risk Safeguard your information by protecting IT data and systems.

During the course of the development of the Philippine Payroll Software we have always asked the same question, “how can our computerized payroll system be beneficial to companies?” We know that some prefersmanual system and others are just afraid to make the shift. Here are some key advantages and disadvantages of both. Advantages of a Manual Payroll System Relatively cheaper since you only need to use either the old fashioned books or use programs like Excel. Using Excel in computing your payroll is not considered as a computerized payroll system but it is more effective than pure manual. By using this you only need a standard computer. Can readily start payroll processing. Disadvantages of a Manual Payroll System Becomes more difficult as the number of employees grows. More tedious to prepare. Does not allow real time reporting and analytics. Human error can be a major inconvenience since an individual carries out all timesheets, taxes, wages and other processes. Errors can be harder to track and might result in various business penalties. Errors can also cause employees to be underpaid or salaries to be delayed this can really create employee dissatisfaction. Advantages of a Computerized Payroll System Avoids most common human errors by implementing a system which requires present data and automatic calculations. Payroll computation tends to be more accurate. Payroll can be done on a timely basis. Number of employees being processed will no longer be a problem. It is easier to maintain. It is easier to track and correct errors. Disadvantages of a Computerized Payroll System Generally more expensive compared to manual payroll systems. Needs standard computer setup in order to operate it well with certain prerequisites. Needs an initial training for those who will maintain the payroll system. In summary, going for a computerized payroll system would be more economical in terms of future savings.

These savings includes both time and money because of accurate computation vs mistakes in manual accounting. Philippine Payroll Software would be very happy to help you assess your current payroll system and even decide if you want to upgrade to a computerized system. Share Tweet 34 shares It has branches in Bacolod, Davao, Cebu, Cagayan de Oro, Iloilo, and one international office in Hong Kong. Backed by certified experts and market-leading brands, MSSC is now recognized as one of the leaders in serving the SME industry. X Get in Touch Interested in our payroll software. Contact us and let’s talk about how it can seamlessly adjust to your growing needs. Book a demo with us by filling out the form below. X Subscribe and Download Payroll Enterprise Brochure. With the development of information technologies there were developed many computer products (software) that make accounting as easy as ABC for those who uses them. From this point accounting can be divided into two basic categories: those which apply manual accounting and those which prefer computerized accounting systems. This paper is targets the main features of manual and computerized accounting, their benefits and shortcomings, and their comparison. From the first look it is not very difficult and it is so indeed, but when there are thousands or millions of transactions the situation dramatically changes. Lots of transactions that must be processed in the accounting cycle make this process routine and even a little mistake or inaccuracy can cause all the cycle from the very beginning in order to find and correct the mistake. So as to shed some light on the matter lets examine accounting cycle more thoroughly. The transactions are recorded in appropriate journals (general journal, sales journal etc) with transaction data, affected accounts’ titles, debit and credit of each affected account and explanation specified in the journal record. The above procedure is used for each transaction.