Accountancy · Ch 9 — Computerised Accounting System
Manual Accounting System vs Computerised Accounting System
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Manual Accounting System vs Computerised Accounting System
Although a manual accounting system and a computerised accounting system rest on the same double-entry foundation, they differ sharply in how day-to-day work is actually carried out. The comparison below is the standard basis on which Andhra Pradesh Intermediate accountancy examiners frame "distinguish between manual and computerised accounting" questions.
| Basis | Manual Accounting System | Computerised Accounting System |
|---|---|---|
| Recording | Each transaction is written by hand into a journal and then posted, again by hand, into every ledger account it affects. | A transaction is entered once, through a voucher screen; the software automatically posts it to every account it affects. |
| Speed | Posting and balancing take considerable time, especially as the number of transactions grows. | Posting, balancing and report generation happen almost instantly, however large the data. |
| Accuracy | Prone to human error — wrong casting, wrong posting, transposition of figures. | Free of arithmetic and posting errors once data is entered correctly; only data-entry mistakes remain a risk. |
| Reports | Trial balance, P&L Account and Balance Sheet have to be prepared afresh, by hand, each time they are needed. | These reports can be generated on demand, as often as required, at the click of a button. |
| Storage | Bulky physical registers and files that occupy considerable space and are vulnerable to fire, damp and pests. | Compact digital storage; years of records fit on a single device and can be duplicated as a backup. |
| Retrieval of information | Locating an old transaction means physically searching through past books, which is slow. | Any past voucher, ledger entry or report can be located in seconds using search or filter tools. |
| Cost | Low initial cost, but rising clerical cost as volume grows. | Higher initial cost (hardware, software, training), but lower running cost per transaction once volume is high. |
| Real-time information | Not available — the position is only as current as the last manual balancing. | Available — balances and reports reflect every transaction entered so far. |
| Skill required | Requires sound knowledge of bookkeeping rules and careful manual calculation. | Requires bookkeeping knowledge plus basic computer operating skill. |