Benefits of learning computerized accounting
The term, computerize means to convert a manual function or into a computer system to enter data into such a system.
The term, accounting means the development, use and maintenance of a system for identifying, recording, classifying and analyzing the financial transactions and financial status of a business or other organization. It helps in relaying a message or event. Consequently, it is known as justification of actions. So, when both the terms are clubbed together it becomes computerized accounting which signifies feeding the identified, recorded, classified and analyzed data into an electronic machine which is known as a computer system.
Features of computerized accounting
- Computerized accounting provides a platform to various software in order to help organizations (whether big or small), firms, businesses to increase the speed and availability of their financial information.
- It has a very significant role in manufacturing companies. It is extensively used in manufacturing operations such as, import and export of goods. It transmits order information and purchase orders to suppliers for production materials as orders come into the system from wholesalers and retailers. Therefore, this shortens the lead time between productions and sales, thus, it helps in increasing the company’s profitability.
- It has become crucial for all types of business. For example: - E-Commerce.
- Many computerized accounting programs are internet-based. Thus, this allows companies to use instant-messaging and email communication methods to transmit sale and purchase information.
- It has made money payment methods easier via computer system(s) i.e. online payment. Thus, it has reduced payment processing delays.
- Computerized accounting has become opportune spot for social networking.
- Financial information can also be exported into financial statements for final review by accounting management.
Advantages of computerized accounting
- Speed:- data entry with its formatted screens and built-in databases of customers and suppliers details and stock records can be carried out far more quickly than any manual processing.
- Automatic document production:-fast and accurate invoices, credit notes, purchase orders, printing statements and payroll documents are all done automatically.
- Accuracy there is less scope of errors in case of computerized accounting as only one accounting entry needed for each transaction and report gets generated by default rather than two or more for a manual system.
- Up – to – date information the accounting records are automatically updated and so account balances will always be up-to-date.
- Availability of information – the data is instantly available and can be made available to different users in different locations at the same time.
- Management of information – it helps by showing which customer accounts are overdue, trial balance, trading and profit and loss account and balance sheet.
- Efficiency – better use of resources and time is made.
- Staff motivation – the system requires trained staff to use new skills, which can make them feel more motivated.
- Cost savings – computerized accounting programs reduce staff time doing accounts and reduce audit expenses as records are neat, up-to-date and accurate.
- Reduce frustration – management can dominate the accounts and thus, it reduces stress levels associated with what is not known.
- The ability to deal in multiple currencies easily – many computerized accounting packages now allow a business to trade in multiple currencies with ease. Problems associated with exchange rate changes are minimized.
- Decipherability (legibility) – computerized accounting programs helps the onscreen and printed data to be clean, clear, fair and readable.
GST/VAT Returns – lastly but not least, it further helps in automatic creation of figures for the regular GST/VAT returns.
Difference between manual record keeping and electronic record keeping