Question

What are the differences between manual and computerised systems when entering final transactions?

Answer 1

Answer:

Accounting is concerned with identification, recording, classifying, summarising and analysing and interpreting the results of financial transactions taken place in business in an accounting year. The basic objective of manual and computerized accounting is to make a proper record of financial transactions, measuring results and presenting them to the stakeholders (like owner, investors, creditors, employees, etc.) Both manual and computerized accounting systems are used for preparation of financial statements but there are some differences between the two which are listed below:

Differences between manual and computerised systems when entering final transactions

Basis of difference	Manual systems when entering final transactions	Computerised systems when entering final transactions
1.Meaning	Manual system is that system where physical registers and account books are used for keeping proper record of business transactions.	Computerized system is that system where computers and various accounting software are used for keeping proper record of business transactions.
2.Calculations	All calculations are carried out manually.	All calculations are carried out by computers and software only by feeding data inputs.
3. Time taken	Manual system requires more time as recording business transactions and calculations are done manually. So, the speed of operations is quite slow.	Time required in Computerized system is comparatively less; all functions like recording and calculations are performed by computer systems. So, the speed of operations is very fast.
4. Accuracy	There is a scope of mistake as recording and calculations are done manually.	Results are more accurate in Computerized system if all data inputs are correct.
5.Cost	This is less expensive as physical registers and account books are used for keeping proper record of business transactions.	The cost involved in Computerized system is very huge, as it includes cost of, computer machine, accounting software, training expenses, etc.
6.Backup	In this system back up is not possible.	Business records can be easily saved and backed up in this system and that too in very less time.
7.Posting entries to ledger accounts	Amounts are transferred to debit or credit of particular ledger account on the basis of journal manually.	Amounts are transferred to debit or credit of particular ledger account automatically
8. Preparation of trial balance	Trial balance is prepared manually, when it is required.	Trial balance is immediately prepared on daily basis.
9. Preparation of financial statements	Financial statements are prepared at the end of accounting period manually with the help of trial balance.	Financial statements are prepared automatically by clicking a button of computer system.