An electronic, or computerized spreadsheet, can be defined as a software application which displays multiple cells that together make up a grid consisting of rows and columns, each cell containing alphanumeric text, numeric values or formulas which performs the calculation processes (Bessant, 2003; Stroman, Wilson, and Wauson 2004 and Power n. d.). It has been extensively employed ranging from the field of business and financial community to engineering, educational, scientific and medical areas (Ballantine, 1991; Bessant, 2003 and Randles, 2005). This essay firstly, will give a brief outline of development of electronic spreadsheet application and particularly indicate its widespread utilization in accounting sector; emphasis will be largely placed on the critical analysis of advantages and pitfalls of spreadsheet modeling in financial accounting and reporting. Finally, remedies which can reduce the probability of dangers of spreadsheets will be introduced to improve the practicability of spreadsheets.
Ballantine (1991), Walkenbach (2007) and Power (n. d.) acknowledged that VisiValc, which was pioneered by Dan Bircklin and written for the Apple II computer in 1978, should be the first electronic spreadsheet. Admittedly, it essentially laid the foundation for future spreadsheets. Release in 1983, Lotus Development Corporation’s 1-2-3, designed to run on the IBM PC, was an instant success, becoming the leading spreadsheet when DOS was the dominant operating system (Walkenbach, 2007; Ballantine, 1991). New spreadsheet programme, Excel, is gradually outstanding due to its function of graphical interface and it has the largest market share on the Windows and Macintosh platforms (Power, n. d.). Both Falck and Lynn (2004) and Grossman (2005) maintains that spreadsheets are so prevalent in business that approximately two thirds of companies continue to depend on spreadsheets to make risky decisions, capture and report financial and managerial...
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