Accountancy · Ch 8 — Computerised Accounting System
Manual Accounting versus Computerised Accounting
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Manual Accounting versus Computerised Accounting
Both a manual accounting system and a computerised accounting system aim at the same end result — recording transactions and presenting the trial balance and final accounts correctly — and both rest on the identical double-entry principles a Telangana Intermediate commerce student studies throughout this course. They differ, however, in the method by which that end result is reached. The comparison below is a standard distinguish-between question in the TS Inter II year Accountancy examination.
| Basis of distinction | Manual Accounting | Computerised Accounting |
|---|---|---|
| Recording | Every transaction is recorded, posted and totalled by hand in the journal, ledger and other books | A transaction is entered once as a voucher; posting, ledger updation and totalling are done automatically by the software |
| Speed | Slow — each stage (journal, ledger, trial balance) is prepared separately, one after another | Fast — the trial balance and reports are generated instantly from the data already entered |
| Accuracy | More prone to clerical/calculation errors (casting, carrying-forward, transposition) because every step is done by hand | Arithmetically accurate once the software is correctly programmed and the data entered is correct |
| Storage of records | Bulky physical books/registers that need large physical storage space and are searched manually | Data stored compactly in electronic form and retrieved instantly through search |
| Cost | Lower upfront (no computer/software cost) but higher ongoing clerical labour cost as volume grows | Higher upfront cost (hardware, software, training) but lower ongoing cost per transaction at high volumes |
| Real-time information | Up-to-date position is known only after fresh manual compilation | Up-to-date position is available instantly at any time, since every entry updates all related accounts immediately |
| Skill required | Requires manual bookkeeping skill (posting, casting, balancing) | Requires computer literacy and familiarity with the specific accounting software, in addition to accounting knowledge |
| Audit trail | A physical trail across books that can be checked page by page | An electronic audit trail (who entered/altered what, and when) built into the software itself |