>> Jul 10, 2015
In past accountants use to prepare the income and expenditure of entire business by the use of spread sheets. Accountants used journals and ledgers in which they recorded business transactions manually but now in today’s world with the introduction of new software and computer applications the accounting systems have migrated to the computerized spread sheets.
Benefits of having computerized accounting in today’s business environment
The introduction of computerized accounting systems have provided the business environment some of the major advantages such as speed and accuracy of recording the operations and most importantly, the ability to check the state of the company’s financial position. Having such advantages no business that has upgraded to a computerized accounting system has ever returned to paper based accounting systems.
The computerized accounting package will offer a number of different facilities such as On-screen input and printout of sales invoices, automatic updating in ledgers, recording of suppliers as well as customers invoices, Automatic updating of the general ledger and adjustment of stock records, Integration of a business database with the accounting program and automatic calculation of payroll and associated entries. It also provides instant report to the management about the aged debtors, a summary of accounts showing customers overdue, stock valuation, sales analysis, VAT returns, budget analysis, etc.
The main advantages of a computerized accounting system are listed below:
- The data entry onto the computer with its formatted screens and in-built databases of customers, supplier details and stock records are carried out more quickly than any manual processing.
- With automatic documentation process fast and accurate invoices, credit notes, purchase orders, printing statements and payroll documents all are done.
- As with introduction of computerization and with development of technology and new accounting software there is less room for errors as only one accounting entry is needed for each transaction rather than two for a manual system.
- With the help of automatic updating system and new and upgraded accounting software’s the accounting records are automatically updated and so account balances will always be up-to-date.
- With the introduction of computerized accounting along with facility of inbuilt data entry and automatic updation the data is instantly available and can be made available to different stakeholders in different locations at the same time.
- The reports which are availed by the computerized accounting produces such information which helps management in monitoring and controling the business
- It increases the Efficiency in the business organization and better use is made of resources and time as cash flow improves through better collection of debts and inventory control.
- The Cost of the business organization is minimized by computerized accounting programs reduction of staff time doing accounts and reduction in expenses towards audit as records are clear and up-to-date.
- Availability of new accounting software’s in the market it has become easy to deal in multiple currencies as many computerized accounting packages now allow a business to trade in multiple currencies with new and improved means so the hindrances regarding exchange rate changes are now minimized.