THE DIFFERENCE BETWEEN MANUAL ACCOUNTING AND ELECTRONIC ACCOUNTING

A Comparison & Contrast Essay

However, are manual and computerized accounting systems so totally
different, or are 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 both accounting 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.
According to Weber, such a complexity of the process and computations may
sound quite shocking for the supporters of the mass implementation of computerized
accounting systems 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. (2013)
According to Vitez, from such a point of view, a computerized accounting
system seems to be 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. (2011)
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 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 small
businesses, 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.
Revised by:
Lagman, Alyssa Noreen R.
AT102










Bibliography
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