Manual Accounting VS Computerized Accounting

Accounting is the main way in which a business keeps track of all their financial activities. All businesses, irrespective of size, have a fixed accounting team, which overlooks and drafts all finance related activities such as transactions, sales and purchases, through which later, detailed analysis and reports can be made. Accounting was simply a means of storing financial information at one point; however, it has evolved into a much wider application that spells out the performance of a business.

Accounting was originally done manually on paper. All financial activities were noted down in what is known as the “accounting ledger”- a big book that kept track of all activities. Manual accounting is usually extremely detailed, since every miniscule piece of information regarding the financial activities must be noted down properly.

With the technical revolution, computerized accounting has come to the forefront, and this is the method employed by most businesses today. Computerized accounting has many advantages over manual accounting, especially if the business is quite big, but both these methods are efficient if they are done properly.

What are the similarities between manual and computerized accounting?

The rules of accounting remain the same, whether it is manual or computerized accounting. As long as they are both done carefully and the data compiled is accurate, both methods are equally effective.

Most accounting is made is the form of double-entry bookkeeping, which does not change for manual or computerized means.

What are the differences between manual and computerized accounting?

1. The speed of processing data.

Due to the mechanized nature of the work, for computerized accounting, the speed of processing data is very fast. Manual accounting records slower processing speed since it requires people to actually input everything on their own, while for a computerized setup, this can be expedited using many tools which will make the process much faster.

1. The accuracy of processing data.

It is believed that computerized accounting has lesser chances of errors, than manual methods. The processing software usually handles and alerts in case of any non-matching variables, which makes the system more fool proof. This however, does not mean that computerized accounting is completely free from errors, since it can still be tampered with purposely.

1. The volume of the data processed.

Computerized accounting can handle a much larger volume of data in one day than manual accounting, since mechanised processes are always faster than manual ones.

1. Storing the data.

Storage is possible for both computerized and manual accounting processes; however, the former allows easier access to stores data than the latter. One can simply type in the date and name of the item they are searching for on the database rather than looking for old papers for hours.

1. Skills required for accounting.

For manual accounting, it needs to be done by people who possess the skills required for accounting a given amount of data. For computerized accounting, these skills are not necessary, since an accounting app or software handles these aspects and one only needs to enter the data correctly.