Advantages Of Manual System
Many years ago, before the invention of computers, bookkeepers and accountants entered and tallied numbers by hand. A manual accounting system can be as simple as a single-entry ledger or as complicated as a double-entry system that keeps track of a long list of accounts. While any accounting system is as effective or ineffective as the quality of its data, manual accounting systems offer facility and ease but may fall short when it comes to compiling reports and connecting dots.
Simplicity and Complexity
Jan 28, 2019 Manual accounting systems served business for hundreds of years since the double entry technique was introduced. Though many businesses choose accounting software, some prefer manual. Faster and efficient in processing of information; Automatic generation of accounting documents like invoices, cheques and statement of account; With the larger reductions in the cost of hardware and software and availability of user-friendly accounting software package, it is relatively cheaper like maintaining a manual accounting system. Manual systems put pressure on people to be correct in all details of their work at all times, the problem being that people aren’t perfect, however much each of us wishes we were.
Efficient way to keep financial records and requires less storage space. Provides the option of recording a sale when you raise an invoice, not when you receive a cash payment from a client. Easy to generate orders, invoices, debtor reports, financial statements, employee pay records, inventory reports. There are more efficient ways in today’s growing technological world that can help keep your organized with a higher productivity level. Here are some disadvantages of manual document filing processes. Takes Up a Lot of Space. The biggest downfall to manual document filing is the amount of space it can take up. When using a manual accounting system, you do not have to worry about duplication errors. With a computerized system, there is a chance you will duplicate the wrong file and use an outdated set of numbers. With a manual system, you simply have a book with your data in it.
A sole proprietor who simply wants to do her own books and develop a working understanding of her company's financial activities may not need a double-entry program that transfers debits and credits between theoretical accounts such as equity and accounts payable. Although accountants and business owners interested in gleaning as much information as possible about company finances can choose from sophisticated systems such as Peachtree and QuickBooks, it is difficult to find a computerized single-entry bookkeeping system that provides simple, straightforward information. An accounting pad divided into 12 columns provides a sufficiently clear accounting format for many small-business owners.
Usability
It is easy to enter information into a manual accounting system, but it can be difficult to distill information and create reports. A bookkeeping program such as QuickBooks can create an income statement in seconds once you select a date range. However, if you use a manual accounting system, you must review and manually transfer information from each relevant account, enter these figures onto a separate page or spreadsheet and then manually perform the computations. A computer bookkeeping program also makes it less likely to make mistakes.
Durability and Permanence
Manual accounting systems are more durable than computer systems, because they exist as hard copies rather than digital files that can be wiped out by a computer mishap. However, paper files can also be destroyed as well by fires or floods, and they are easier to misplace. In addition, a digital accounting format gives you the opportunity to back up files by making multiple copies. It takes much longer to photocopy or manually copy a spreadsheet than to save a computer file on a thumb drive or cloud.
Transparency
Computer files can be modified simply by adding and deleting data. The numbers on the screen show no trace of these changes unless you dig deeper and uncover the date a file was last modified. In contrast, manual accounting systems show evidence of having been changed. If you work in pencil, then erasures are obvious, and if you work in pen you must cross out old entries to make new ones. The difficulty of hiding changes makes it easier to tell when you have changed a manual accounting system and facilitates transparency.
References
About the Author
Devra Gartenstein is an omnivore who has published several vegan cookbooks. She has owned and run small food businesses for 30 years.
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