Accountancy · Ch 7 — Computerised Accounting System
Manual Accounting vs Computerised Accounting System
3
Manual Accounting vs Computerised Accounting System
Manual accounting and computerised accounting follow the same underlying principles of double-entry bookkeeping — only the mechanism of recording and processing differs. The table below compares the two on the points most commonly tested.
| Basis of comparison | Manual Accounting System | Computerised Accounting System |
|---|---|---|
| Recording of transactions | Entries are written by hand in physical journals and ledgers | Entries (vouchers) are keyed in once; posting to ledgers is automatic |
| Speed | Slow — each posting and total is done by hand | Fast — reports are generated almost instantly |
| Accuracy | Prone to casting, posting and carry-forward errors | Arithmetic is performed by the software, so calculation errors are eliminated (data-entry errors can still occur) |
| Storage and retrieval | Bulky physical registers; retrieving an old entry means searching through pages | Compact electronic storage; any past entry can be searched and retrieved instantly |
| Cost | Low initial cost, but rising staff/stationery cost as volume grows | Higher initial cost (hardware, software, training), but lower cost per transaction as volume grows |
| Real-time reporting | Reports (trial balance, final accounts) are prepared only periodically | Reports can be generated at any time, on demand |
| Backup and security | Physical books can be lost, damaged, or destroyed with no copy | Data can be backed up and password-protected, though it is also vulnerable to technical failure or hacking |
| Correction of errors | Requires rectification entries or re-writing pages | Most systems allow the original voucher to be edited directly, subject to the access controls in place |
| Suitability | Suited to a very small business with few transactions | Suited to businesses of every size, and essential once transaction volume grows |