accounting and computerised accounting are given below: Basis Manual accounting Computerised accounting i) Recording of transactions Transactions are recorded manually. Transactions are recorded using computers. ii) Storage Transactions are stored in volumes of books. Transactions are stored in well- designed databases.
iii) Preparation of ledger accounts, trial balance and financial statements Ledger accounts, trial balance and financial statements are prepared manually. Once journal entries are passed or subsidiary books are entered, data are processed automatically and ledger accounts, trial balance and balance sheet are automatically prepared. iv) Preparation of report Analysis of financial statements and preparation of report are to be done manually. Financial statement analysis such as ratio analysis, preparation of cash flow statement, etc.
is automatically done. v) Time involved It takes lot of time as everything from journalising to report generation is done manually. It saves lot of time. Time is taken only for passing journal entries or entering data in subsidiary books.
Once date are entered, preparation of ledger, trial balance, financial statements or report generation is done within seconds. vi) Cost involved The cost is high in manual accounting as several books of account are to be maintained. The cost is less compared to manual accounting as all the records are kept in soft copy. vii) Retrieval of data It becomes difficult and time consuming to retrieve data as several books have to be gone through.
Retrieval of data is easier as the records are kept in soft copy in data base. By giving instructions, data can be retrieved quickly. viii) Accuracy Certain clerical errors such as arithmetical, error in carrying forward, etc. can happen.
If the input given is correct, the output will also be correct. Arithmetical error, error in carrying forward will not happen provided the programming is correct. ix) Communication of report Communication of report takes time and it is difficult as it has to be done manually to the users of information. It is easier and takes lesser time.
The report is in soft copy and if online facility is available, it can be communicated to the users very easily at