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Manual Accounting and Computerized Accounting By saman azeemi

Wednesday, 5 June 2013
Computerized Accounting
by saman azeemi
Accounting is an integral part of every company. Companies are required to keep books on their credits and debits. So which is best for your company idea - people or software?
As many professional accounting firms and auditors condition - accounting is a language of company which is approved in all designed and creating countries.
Every company applies accounting because it is generally approved that organizations have to reveal certain economical and control details to the government and public users and of course because accounting is indispensable tool in company decision-making procedure. With the development of details technologies there were designed many pc products (software) that create accounting as easy as ABC for those they uses them. From this point accounting can be divided into two basic categories: those which implement manual accounting and those which choose computerized accounting techniques. This document is targets the primary features of manual and computerized accounting, their benefits,and their comparison.
bookkeeping needs
From the accounting theory it is known that accounting pattern contains the following steps: journalizing the dealings, publishing them to publication information, planning test stability, making adjustment information, planning modified to end-of-period test stability, planning fiscal reviews and appropriate disclosures, journalizing and publishing the ending information, and planning after-closing test stability at last. From the first look it is not very challenging and it is so indeed, but when there are countless numbers or an incredible number of dealings the situation dramatically changes. Lots of dealings that must be processed in the accounting pattern create this procedure schedule and even a little error or inaccuracy can cause all the pattern from the very beginning to find and correct the error. So as to shed some light on the matter lets examine accounting pattern more thoroughly.
Every deal (event that change the money or obligations of the company) must be recognized, categorized and documented; moreover there must be corresponding information identified and changed. The dealings are recorded in appropriate journals (general publication, revenue publication etc) with deal data, impacted accounts' titles, charge and credit of each impacted account and explanation specified in the publication history. The above procedure is used for each deal. All the publication information must be published to the publication on a regular foundation (daily or weekly), which is a group of information put together and categorized (assets, liabilities, revenue, costs and equity)--in other words common publication summarizes all the dealings within an occasion interval. In inclusion there is a additional publication can be used, which is a more detailed source, where individual items comprised (inventory, information payable and information receivable). General publication contains controlling information which summarize the content of additional publication.
At the end of accounting interval with the help of common publication there is a test stability measured to create sure that charge and credit are in stability (if they are not equal it indicates that there is an error somewhere). There must be appropriate adjustments made like devaluation and earnings tax costs, modified information published to the publication and modified test stability measured. After this there are fiscal reviews should be ready, such as stability sheet, earnings declaration, declaration of retained earnings and declaration of cash flows. Then publication information of temporary information are closed to permanent information and published to the publication, and at last after-closing test stability can ready.
In purchase to stay on top organizations have to analyze the performance of all organizational cells (starting from unskilled employees and operating employees, and finishing with top managers and other key personnel) and discover all the diversions from the strategy, their causes, and finally companies' control has to take corresponding actions to prevent such diversions in the future. These techniques are called inner manages and consist of the following five elements: control atmosphere, threat evaluation, tracking, details and interaction, which are assessed separately and put together a single rate of organization's performance. Control atmosphere indicates the way of organization's inner control--which administrator manages the employees, how and whom does that administrator reviews next about the strategy performance etc. Risk evaluation indicates actions to determine all the danger in advance, their causes, probabilities and counter-measures to prevent and manage them; how can those threats influence organization's performance and economical state; how to reduce the costs of facing economical threats etc. Monitoring indicates qc of organization's operations and employees.
Information and interaction element indicates the control over interaction circulation and the high high quality of details circulation within the company to be able to reduce enough duration of interaction and details losses. Internal control techniques allow to keep companies' resources from dissipation and control efficiency and usefulness of all divisions.
Let's return to the overall picture of the document. Guide accounting indicates that employees execute the whole accounting pattern manually on a regular basis: they calculate test balances, journalize dealings, prepare economical declaration reviews and other routines. Of course it needs plenty of your energy and attempt, sources and attempt in huge organizations. Automated accounting indicates that the only thing that employees do is recording dealings into the pc which processes the other actions of accounting pattern automatically or by request. But this is a very simplified view on the computerized accounting because deal is a complicated category such as not only revenue or acquisitions, but devaluation, premiums and wages calculation, dividends. So computers provide accurate calculations and smart reviews but it needs plenty of your energy and attempt, sources and attempt too and it's challenging to assess which accounting type is more fast and economic. If manual accounting needs qualified accounting firms to keep a history of dealings, computerized needs accounting firms which can use specific application and thus they price more. Programs calculates faster but it does not know what you need until you can clearly explain what exactly you need. In inclusion good computerized accounting program can price countless numbers and even huge numbers money, depending on the complexity and the size of company. Automated accounting provides better inner control report program for any time interval (computer can control countless numbers signs simultaneously and create notifications to the appropriate divisions or employees if some signs do not correspond to the normal state), while manual control needs a longer interval.
Among the key benefits of manual accounting there are:
comparatively cheap workforce and sources, stability, independence from devices, skilled employees availability; the drawbacks include: low cost, improved attempt of accounting firms, relatively slower inner control confirming, schedule work and some others.
Among the primary benefits of computerized accounting there
are: high-speed and flexibility of confirming, stability, no schedule work, improved accuracy, inner control program of improved efficiency, easy back up and restoration of records; the drawbacks include: extremely price on creating, introducing and using the program, special trainings for employees, improved employees costs, dependence on devices etc.
Obviously both computerized and manual accounting have benefits and drawbacks but they execute the same task, and the outcome is the same. The primary differences between them are the costs Health Fitness Articles, rate and flexibility.
Thus medium and small businesses usually choose manual accounting without detriment to high quality while huge corporations implement complicated accounting techniques which price huge numbers money but the effect from their application exceeds all the expectations.

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