Difference between manual and computerised accounting - class-XI

In a manual system of accounting, the preparation of financial statements pre-supposes the availability of trial balance. However, in computerised accounting, there is no such requirement.

The danger of the system crashing due to hardware failures and subsequent loss of work is a serious limitation of computerised accounting system. However, providing for back-up arrangements can obviate this limitation.

• Operating Procedure : It is a well-defined operating procedure blended. suitably with the operating environment of the organisation. The use of computers in any database oriented application has four basic.

Front-end Interface is an interactive link or a dialog between the user and database-oriented software through which the user communicates to the back-end database.

Accounting, by definition, is the process of identifying, recording, classifying and summarising financial transactions to produce the financial reports for their ultimate analysis.

In a manual accounting system, transactions recorded in the books of original entry are further classified by posting into ledger accounts. This results in transaction data duplicity. In computerised accounting, no such data duplication is made to cause classification of transactions.

A computerised accounting system is an accounting information system that processes the financial transactions and events as per Generally Accepted Accounting Principles (GAAP) to produce reports as per user requirements. Every accounting system, manual or computerised, has two aspects.

The advantage of computerised accounting system, storage and retrieval, allows the users to store data in a manner that does not require a large amount of physical space.

In a manual accounting system Adjusting entries are
recorded to match the expenses of the accounting period with the revenues
generated by them.

Earlier the physical copies of financial reports were sent via post or courier (though the option is still available).

Computerized accounting systems are designed to automate the recording, processing, and reporting of financial transactions.

Modern accounting software is flexible and can be configured to support both single-entry and double-entry bookkeeping systems.

Access control in computer systems is maintained by both physical security (like a librarian or terminal room access) and logical security (like passwords). Therefore, combining these methods provides a more robust security framework.

A check digit is a form of redundancy check used for error detection on identification numbers. It involves appending a digit calculated from the other digits in the number to ensure data integrity during input.

The EDP (Electronic Data Processing) department is responsible for the operational aspects of computing, including the distribution of processed output to the relevant departments. Authorizing transactions and correcting errors are typically functions of the user departments, not the EDP department.

General controls are designed to protect the integrity of the system. If the EDP department, which operates the system, also originates changes in master files, it creates a conflict of interest and bypasses the segregation of duties, rendering general controls ineffective.

In a CIS environment, errors are actually more systemic because a single programming error can affect every transaction processed by that system. Manual systems are prone to random human errors, but computer systems are prone to consistent, systemic errors.

In a computerised accounting system, the requirement of additional manpower is confined to data entry operators for storing additional vouchers. The additional cost of processing additional transactions is almost negligible because of which the computerised accounting system is highly scalable.

Generalized audit software is used for data analysis, sampling, and calculations. Keeping an independent log of access to application software is a security/control function, not a function of audit software.

Computerized systems often lack the visible, step-by-step audit trail found in manual systems, as transactions are processed electronically, which is a disadvantage.

Training costs are an implementation expense, not an operational advantage of the system itself.

The advantages of computerised accounting system are speed, accuracy and up-to-date information, whereas cost of training is a limitation of computerised accounting system.

Steps involved in designing accounting reports :-

1.Definition of objectives 

2.Structure of the report 

3.Querying with the database

4.Finalizing the report 

Therefore Reporting System is an integrated set of objects that constitute the report.

Identifying is one of the activities in the context of comparison between manual and computerised accounting system. The identification of transactions, based on application of accounting principles is, common to both manual and computerised accounting system.