Traditionally all accounting information was recorded by hand in a written form. Employees performed the whole accounting cycle manually; they calculated trial balances, journalized transactions, prepared financial statements and other routines. Traditional manual accounting was a very tedious process, and required accountants to spend large amounts of time mathematically checking numbers. While many small companies still use the traditional ways of accounting, many large companies are switching to computerized accounting systems.
The biggest difference between traditional and computerized accounting is the speed of operations. Computerized accounting often requires individuals to manually input financial information into the program; once the data is entered it is saved. The accounting program is responsible for making sure journal entries balance prior to posting information into the company’s general ledger. This gives accountant time to process more information than before, and creates an easier review processes. Accountants can spend less time calculating and looking for errors and more time analyzing information.
Another advantage of using computerized accounting systems is accuracy. With traditional accounting accountants had to calculate everything manually, columns had to be added up and numbers were moved from page to page. This left room for many clerical errors. A trial balance is normally done to check for arithmetical errors. However a trial balance does not guarantee that all errors will be detected. If an error occurred, many hours had to be spent trying to find and correct them. With accounting software, this problem is somewhat eliminated. Most computerized accounting systems have internal check and balance measures to ensure that all transactions and accounts are properly balanced before financial statements are prepared. While errors still can occur, computerized systems will not allow journal entries to be out of balance when...
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