What Is Computerized Automated Accounting?
A firm's senior management establishes computerized automated accounting to improve financial accounting and reporting procedures. They also implement such procedures to ensure that financial statements are accurate and complete.
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Definition
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Computerized automated accounting consists of all processes, computer software and hardware, as well as databases, that a firm uses to record operating activities in real-time.
Significance
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Computerized automated accounting is important because corporate operating transactions are often substantial, and the accounting staff may not have the ability to record such activities in real-time.
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Expert Insight
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A company may hire a specialist, such as an information systems consultant or a certified public accountant, to help set up computerized accounting systems.
Asset and Liability Recording
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An automated computerized accounting system debits asset accounts and credits liability accounts to increase their balances. A bank may use such a system to record trading transactions.
Revenue and Expense Recording
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An automated computerized accounting system debits expense accounts and credits revenue accounts to increase their balances. An insurance company may use this system to record claims and premium transactions.
Financial Reporting
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An accountant uses a computerized accounting system to prepare financial statements, such as income statements, balance sheets and statements of cash flows.
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References
- Photo Credit computer image by Ewe Degiampietro from Fotolia.com
