Question

Explain the similarities and differences in the flow of information through the

income and expense accounts and the effect on the Statement of Financial

Performance in a manual versus a computerised accounting information system.

Answer 1

Similarities between Manuel and Computerized Accounting Information System:

• The flow of the information is same in both the accounting system i.e from General Journal – Ledger – Trial Balance and then Financial Statement.
• The Reports generated by both the accounting system is same and contain the same information.
• The insight we will get from both the accounting system is same.

Differences between Manuel and Computerized Accounting Information System:

• Computerized Accounting Information System is an efficient way to keep financial records and it requires less storage space.
• Manual accounting is much cheaper with paper and pencil than a computerized system, which requires a computer and software. And also we have to incur the maintenance, training and other expenses. Expenses can add up fast with costs for printers, paper, ink and other supplies.
• Ease of backup is also one of the main difference. All transactions can be saved and backed up, in case of fire or other wrong events. We can’t do this in case of paper records unless we make copies of all records which is long inefficient process.
• Computerized Accounting Information System helps in easy identification of errors.
• Accounting software processes data and creates reports much faster than manual systems. Calculations are done automatically in software programs, minimizing errors and increasing efficiency. Once we entered the data input, we can create reports by pressing a button in Computerized Accounting Information System.