Question

Compare and contrast a manual accounting system with a computerized accounting system for processing customer transactions. Include an explanation of how the accounts receivable subsidiary ledger compares with the Customer List.

Answer 1

In earlier days when the technological advancement have not taken place most of the chores are performed manually among which accounting is one of such areas as accounting is as old .

Manual accounting was very time consuming and the scope of errors was high due to several reasons such as knowledge of the person preparing the accounts etc and various accounts and books need to be prepared separately. When the computerized form of accounting was introduced it removed many problems such as time consumption, risk of errors and frauds to an extent, use of paper etc due to its capabilities and in turn advantageous for the organisations.

There are several contrasting features between both the ways of accounting among which, few are discussed below:-

*One of the key feature of difference is the speed in which manual accounting is slow when compared with computerized accounting which is comparatively faster.

* In manual accounting, the calculations are fine manually and in the other the calculations are automatically done once the input is fed into the system.

* Backup is normally not possibly in manual accounting and in computerized accounting, the transations can be saves and backed up.

* In.manual accounting adjusting entries can be made for rectification of errors which cannot be made in computerized accounting.

* Financial statements are prepared separately at the end of a specific period in manual accounting where as they are done automatically at a mouse click even the corresponding entries are being made in their respective fields.

* Trial balance is prepared when necessary in manual firm where as it is auto generated in computerized form.

* If an entry is omitted in a particular area only that account is effected in manual accounting but in computerized accounting it affects all the corresponding areas or field's.

In manual accounting for accounts receivable, subsidy ledger we have to make entries both in the subsidiary book and also in the customers account , and in computerized accounting if we enter the transaction in any one account I.e, either subsidy ledger or the customers list, both the accounts are automatically adjusted and the result is known very quickly and accurately.