advantages

Advantages of Computerised Accounting System

Computerised accounting offers several advantages vis-a-vis manual accounting,
these are summarised as follows ;
• Speed : Accounting data is processed faster by using a computerised
accounting system than it is achieved through manual efforts. This is because
computers require far less time than human beings in performing a task.
• Accuracy : The possibility of error is eliminated in a computerised
accounting system because the primary accounting data is entered once
for all the subsequent usage and processes in preparing the accounting
reports. Normally, accounting errors in a manual accounting system occur
because of repeated posting of same set of original data by several times
while preparing different types of accounting reports.
• Reliability : The computer system is well-adapted to performing repetitive
operations. They are immune to tiredness, boredom or fatigue. As a result,
computers are highly reliable compared to human beings. Since computerised
accounting system relies heavily on computers, they are relatively more reliable
than manual accounting systems.
• Up-to-Date Information : The accounting records, in a computerised
accounting system are updated automatically as and when accounting
data is entered and stored. Therefore, latest information pertaining to
accounts get reflected when accounting reports are produced and printed.
Real Time User Interface : Most of the automated accounting systems are
inter-linked through a network of computers. This facilitates the availability
of information to various users at the same time on a real time basis (that
is spontaneously).
• Automated Document Production : Most of the computerised accounting
systems have standardised, user defined format of accounting reports that
are generated automatically. The accounting reports such as Cash book,
Trial balance, Statement of accounts are obtained just by click of a mouse
in a computerised accounting environment.
• Scalability : 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. As a result the computerised accounting systems are
highly scalable.
• Legibility : The data displayed on computer monitor is legible. This is
because the characters (alphabets, numerals, etc.) are type written using
standard fonts. This helps in avoiding errors caused by untidy written
figures in a manual accounting system.
• Efficiency : The computer based accounting systems ensure better use of
resources and time. This brings about efficiency in generating decisions,
useful informations and reports.
• Quality Reports : The inbuilt checks and untouchable features of data
handling facilitate hygienic and true accounting reports that are highly
objective and can be relied upon.
• MIS Reports : The computerised accounting system facilitates the real time
production of management information reports, which will help
management to monitor and control the business effectively. Debtors’
analysis would indicate the possibilities of defaults (or bad debts) and also
concentration of debt and its impact on the balance sheet. For example, if
the company has a policy of restricting the credit sales by a fixed amount
to a given party, the information is available on the computer system
immediately when every voucher is entered through the data entry form.
However, it takes time when it comes to a manual accounting system.
Besides, the results may not be accurate.
• Storage and Retrieval : The computerised accounting system allows the
users to store data in a manner that does not require a large amount of
physical space. This is because the accounting data is stored in
hard-disks, CD-ROMs, floppies that occupy a fraction of physical space
compared to books of accounts in the form of ledger, journal and other
accounting registers. Besides, the system permits fast and accurate
retrieval of data and information.
• Motivation and Employees Interest : The computer system requires a
specialised training of staff, which makes them feel more valued. This
motivates them to develop interest in the job. However, it may also cause
resistance when we switch over from a manual system to a computer
system.