Define a Computerised Accounting System Distinguish between a Manual and Computerised Accounting Systems - Accountancy - Computerised Accounting System

Question

Define a Computerised Accounting System Distinguish between a
Manual and Computerised Accounting Systems

Saurabh Mehta · Accepted Answer

Computerised
Accounting Systems is based on the concept of database It is an
accounting information system that processes the financial
transactions and events in accordance to the Generally Accepted
Accounting Principles (GAAP) to produce reports as per the
requirements of the users
The computerised
accounting is one of the database oriented application, where in
the transactions data is stored in a well-organised database The
accounting systems are of two types namely Manual and Computerised
Accounting Systems
The following are
some point of differences between Manual and Computerised
Accounting Systems

Basis of
Difference

Manual
Accounting Systems

Computerised Accounting Systems

(i) Identifying

The identification of
transactions is based on the application of the accounting
principles

The identification of
transactions in computerised accounting is also based on the
application of accounting principles

(ii) Recording

In Manual Accounting Systems, the
recording of financial transactions is done through books of
original entries, i e Journal

In Computerised Accounting
Systems, the data of such transactions is stored in a well designed
database

(iii) Summarising

By ascertaining the balance of
various accounts, transactions are summarised to produce Trial
Balance in the Manual Accounting Systems Consequently, the
generation of ledger accounts becomes a necessary condition

In Computerised Accounting
Systems, the originally stored transactions data are processed to
give out the list of balances of various accounts to be finally
shown in the Trial Balance report Thus, the generation of ledger
accounts is not a necessary condition

(iv) Classification

In Manual Accounting Systems,
transactions recorded in the books of original entry are further
classified by posting into ledger accounts Thus, the data can be
duplicated

In
order to produce ledger accounts in Computerised Accounting
Systems, the stored data is processed to appear as classified, such
that no data is duplicated

(v) Adjusting Entries

Adjusting entries are recorded to
match the expenses and revenues generated of the accounting period
So, under Manual Accounting System, these entries are made to stick
to the principles of cost matching revenue

In Computerised Accounting
Systems, no such adjusting entries for errors and rectification are
made Thus, Journal and vouchers are prepared and stored to follow
the principles of cost matching revenue

(vi) Financial Statements

The preparation of financial
statements hypotheses the availability of Trial Balance under the
Manual System of Accounting

However, in Computerised
Accounting System, journal vouchers are prepared and stored to
follow the principles of cost matching revenue, but there is
nothing like passing adjusting entries for error and
rectification

(vii) Closing the books

After preparing financial
reports, the accountants prepare books for the following accounting
period, which is done by posting of closing and reversing the
closing Journal entries

In the Computerised Accounting
Systems, to create and store the opening account balances in the
database, year-end process is used

Basis of Difference	Manual Accounting Systems	Computerised Accounting Systems
(i) Identifying	The identification of transactions is based on the application of the accounting principles.	The identification of transactions in computerised accounting is also based on the application of accounting principles
(ii) Recording	In Manual Accounting Systems, the recording of financial transactions is done through books of original entries, i.e. Journal.	In Computerised Accounting Systems, the data of such transactions is stored in a well designed database.
(iii) Summarising	By ascertaining the balance of various accounts, transactions are summarised to produce Trial Balance in the Manual Accounting Systems. Consequently, the generation of ledger accounts becomes a necessary condition.	In Computerised Accounting Systems, the originally stored transactions data are processed to give out the list of balances of various accounts to be finally shown in the Trial Balance report. Thus, the generation of ledger accounts is not a necessary condition.
(iv) Classification	In Manual Accounting Systems, transactions recorded in the books of original entry are further classified by posting into ledger accounts. Thus, the data can be duplicated.	In order to produce ledger accounts in Computerised Accounting Systems, the stored data is processed to appear as classified, such that no data is duplicated.
(v) Adjusting Entries	Adjusting entries are recorded to match the expenses and revenues generated of the accounting period. So, under Manual Accounting System, these entries are made to stick to the principles of cost matching revenue.	In Computerised Accounting Systems, no such adjusting entries for errors and rectification are made. Thus, Journal and vouchers are prepared and stored to follow the principles of cost matching revenue.
(vi) Financial Statements	The preparation of financial statements hypotheses the availability of Trial Balance under the Manual System of Accounting.	However, in Computerised Accounting System, journal vouchers are prepared and stored to follow the principles of cost matching revenue, but there is nothing like passing adjusting entries for error and rectification.
(vii) Closing the books	After preparing financial reports, the accountants prepare books for the following accounting period, which is done by posting of closing and reversing the closing Journal entries.	In the Computerised Accounting Systems, to create and store the opening account balances in the database, year-end process is used.

Define a Computerised Accounting System. Distinguish between a Manual and Computerised Accounting Systems.