Book-Keeping and Accountancy · Ch 10 — Computer in Accounting
Manual Accounting System vs. Computerised Accounting System
Manual Accounting System vs. Computerised Accounting System
Manual accounting and computerised accounting both follow the same underlying principles of double-entry book-keeping studied throughout this syllabus — the difference lies entirely in how the recording, classification and reporting are carried out.
In a manual accounting system, every transaction is written by hand into the Journal (or a subsidiary book), then posted by hand into the Ledger, and the Trial Balance and Final Accounts are prepared by manually totalling and balancing these books — exactly as done in the earlier chapters of this syllabus. In a computerised accounting system, a transaction is entered only once, as a voucher, and the software automatically posts it wherever it is needed and prepares every subsequent statement from that single entry.
| Basis of distinction | Manual Accounting System | Computerised Accounting System |
|---|---|---|
| Recording | Each transaction recorded and posted by hand, in several books | A transaction entered once (as a voucher); posting is automatic |
| Speed | Slow — each step done manually | Fast — reports available almost instantly |
| Accuracy | Prone to clerical/casting errors | Free of arithmetical/posting errors (accurate once data is entered correctly) |
| Trial Balance | Prepared manually; must be manually checked to tally | Generated automatically and always tallies (since it is derived, not separately cast) |
| Storage | Physical books/registers, needing physical storage space | Data stored electronically; needs comparatively little physical space |
| Retrieval of information | Slow — requires manually searching through books | Fast — any past voucher or report can be retrieved in seconds |
| Cost | Low initial cost, but high continuing clerical labour cost | Higher initial cost (hardware, software, training), lower continuing labour cost |
| Reports (MIS) | Limited; special reports need fresh manual compilation | A wide range of ready-made and customised reports can be generated instantly |
| Risk of loss/damage | Fire, pests, or physical damage can destroy books permanently | Data can be safeguarded through regular backups, though it is vulnerable to virus/hacking if not secured |
Transferring the debit and credit effects of a transaction, recorded first in a Journal or voucher, into the concerned Ledger accounts — done manually in a manual system and automat …
A statement of ledger balances that, in a computerised system, is generated automatically from the same underlying vouchers, and therefore always tallies, unlike a manually prepared Trial Balance which can go wr …