What Are the Advantages of Computerized Accounting Vs. Manual Accounting?

A manual accounting ledger.

The proliferation of computers beginning in the 1990s has had a profound effect on the way people conduct business. Accounting is no exception in this regard. The spread of computers and the increasing power and capabilities of computer software gives computerized accounting numerous advantages over manual accounting.

Legibility

The switch to computerized accounting from manual accounting has a very fundamental advantage: legibility. Manual accounting typically is performed by hand, in pen, in a ledger. If the writer has bad handwriting, it can be difficult to read the entries in the ledger at a later date. This is not a concern with computerized accounting, as every entry looks exactly the same on a computer screen or a paper printout, regardless of who entered it into the computer software.

Physical Space

Physical space is another advantage of computerized accounting. When accountants eventually fill manual accounting ledgers, the ledgers require replacements. After a few years and ledger replacements, the ledgers will require more space for storage, with that requirement increasing with every new ledger. The computer used for accounting will remain the same physical size, regardless of the number of accounting entries.

Simplicity of Calculations

The simplicity of calculations in computerized accounting is perhaps the most important advantage over manual accounting. With computerized accounting, reports detailing spending habits over a given period of time can be generated almost effortlessly, with the computer software performing the long calculations. In manual accounting, however, obtaining similar information is significantly more time-consuming because the user must add up each entry by calculator. If the ledger has a large number of entries, or if there are multiple ledgers, looking through the information and adding up potentially hundreds of entries could take hours.

Error Checking

Another important advantage of computerized accounting is the ability of the software to check for errors that the user may have missed. For example, accounting software typically will prevent an entry from being made if both sides of the entry do not total to the same amount, which is required in accounting. It would be relatively easy for a user to occasionally overlook an error of this type when using manual accounting.

Ease of Making Changes

The ease of making changes in computerized accounting, when compared to manual accounting, is a significant advantage. If the bookkeeper notices an error, for example, it would require only a few clicks of the mouse to correct it with computerized accounting software. With manual accounting, however, it would be significantly more difficult to change because the original entry is written in pen and an incorrect figure may affect multiple entries.

References

• Business-software.com: How Your Business Can Benefit From Accounting Software
• Miscrosoft Small Business Center: Why accounting software is a must-have for most businesses