What Is Computerized Accounting?

Accounting is a financial method used by businesses to collect, organize, process and summarize data for reports and statements. Accounting is used to keep track of business trends and to report relevant facts within the business. Computer and business software allow more efficient processing and organization of data.

Data Accuracy

Information entered into the computerized accounting system can be edited for accuracy and valid value ranges. The information is placed into various categories according to the rules of accounting and thus is organized and summarized into various classifications. This allows management to monitor business transactions.

Data Organization

Data in accounting are classified by rules. For example, the amount of money a business has on hand is classified as cash. Bills that are sent to clients are accounts receivable. In the general ledger system, this data would be double-entered--if a client pays a bill the cash asset is increased but the accounts receivable is decreased.

Management Reports

Data within the computerized accounting system is accurate and up-to-date. Management can request online or printed reports in real-time and that makes management decisions more reliable and timely.

Trend Analysis

The computer retains data and past reports. Computer business software can be used to compare results from one period with another period, allowing management to respond quickly to trends.

Regulatory Compliance

Reports are required on a regular basis from various government agencies. A computer system can organize their data and reports to comply with these statutory requirements, saving time.

Integrated Systems Data

Computerized accounting allows the data to be entered only once and to be properly recorded accurately in the various business categories. For example, if a client purchased a product, inventory would have to be reduced, a bill would have to be sent, and account receivable would have to increase.

References

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