A Comparative Study between Manual and Computerized Accounting System

on the Efficiency of Record Keeping

An accurate and efficient record-keeping is one of the most useful resources needed to

make effective decisions for the business. Proper business record keeping helps you to manage

your accounts, interests, taxes and working costs effectively (Fox, 2017).

With the rise of technology, aside from manual accounting system, businesses already

tend to use computerized accounting system in record-keeping. As differentiated in Key

Differences, a manual accounting system is one that uses physical registers and account books,

for keeping financial records while computerized accounting is one that uses an accounting

software, for recording financial transactions electronically. In the modern business world,

problems arise on choosing what to use among these two systems. Practically, the choice

depends on the scale of the business operations. Some small-scaled business firms find it more

advantageous to use the manual accounting system. However, the business world, in general, has

a larger scope than what we think it has – the reason why computerized accounting is a better

choice.

Computerized accounting has the advantage of increased efficiency and time

management when compared with manual accounting. Computers may more rapidly perform

accounting functions or assessments than manual accounting systems, once data has been entered

into the system (Rush, 2019). Humans as they are, employees get tired eventually, limiting them

from doing their tasks quickly and efficiently.

Computerized accounting also provides a higher accuracy in the accounting records. The

potential for human error is greater when employees are manually completing accounting
procedures. This may be particularly true when dealing with multiple currencies (Rush, 2019).

Incorrect recording of the transaction, omission of the transaction figure transposition and so

forth are more likely to occur while preparing manual accounts (Surbhi, 2018). Computers, on

the other hand, process data in a customized database. Exchange rates and other necessary

computations are done more accurately since computers are programmable.

Another advantage of computerized accounting system is, unlike manual accounting, it

can save and back up accounting records. Backing up reports and previous accounting records is

necessary in the assessment level of the business. Previous transactions and operations must be

properly recorded in order to keep track with the performance of the business. The accounting

records, in a computerized accounting system, are updated automatically as and when accounting

data is entered and stored. Therefore, backing up becomes easier.

As time passes, the demand of the customers become bigger in volume. Accordingly,

business transactions also increase in volume. As the number of business transactions increases,

it is difficult to manage accounts manually, as it takes a lot of time to update a single transaction

in all the accounts that it affects. In computerized accounting, a number of limitations of the

manual accounting have been removed (Surbhi, 2018). An automatic process of entering data in

the accounting books surges the efficacy of record keeping in the business industry.

Technology has been developed and is accessible within the industry. Why not take

advantage of it? With all the reasons presented above, it is but logical to embrace modernity for a

more accurate record-keeping and improved accounting profession.

Rean Jane D. Escabarte

GE5 (2:00-3:00 PM - MWF)