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Describe the advantages and disadvantages of using a computerised system, giving examples throughout.

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Introduction

Task 1 Describe the advantages and disadvantages of using a computerised system, giving examples throughout. By using a computerized accounting system can help a business manage accounts more efficiently. Popular systems include Sage, or Omni accounts. It can make the process quicker and more straightforward. An accounts system will be used for all the important financial transactions in the business and the business will rely on it to give critical information about the health of the business. A computer accounting system can replace the manual handwritten accounting records, the ledgers and daybooks. Written records are normally the traditional form for recording information, particularly for small businesses. Traditionally, accounts were kept on paper with handwritten entries. Many small businesses still use the traditional methods of book-keeping, often using specially printed books to organize records. However, handwritten accounts can take a significant amount of your business' time and it is easy to make mistakes. Manual Accounting System: The manual accounting system consists of the following: * Sales ledger * Purchase ledger * General or Nominal ledger * Cash Book Also a business like a sole trader may keep stock control and payroll records, but because of the different expertise of the business a full set of accounts is not always required. ...read more.

Middle

When the system is introduced it must be chosen with great care and with proper professional advice, this is mainly because it has to be suited to the companies required needs and it must be easily operated by the intended workforce. If a business wishes to cut the amount of work from that of a paper based system, a computer and printer will organize the business a substantial amount of time. The financial information is stored in exactly the same way as a paper based system. The main difference is that the computer makes all the entries for the business, based on the information entered, and then will prepare the accounts. There are fewer worries of the accounts balancing because each entry made will be automatically be entered into the right ledgers. There are therefore some potential problems with a manual and computerized system. If used correctly and a careful eye for error is used, then the computer based system will save the user time in the long run compared to an manual accounting. The benefits of a computerized computer system allows staff cuts to be made, as a book keeper will no longer be needed, but instead someone who is comfortable with the software. ...read more.

Conclusion

With a computer, you can request and receive accounting reports at a moment's notice. The most important advantage of using the computer is the speed with which we can get accounting done. In addition, we find that it is very easy to do accounting functions. For example the task of doing double entry, when done from the accounts system it is automated which means the accounting system automatically performs the double entry. However using computerised accounting may have drawbacks, it is possible that data can be lost because of hardware or software damage. Since the computer has no judgement of its own, it does not pick up on errors as a human being does. There can be loss of data due to accidents like fire etc. There can be loss of data or change of data due to fraud or embezzlement. There can be loss or unavailability of data due to loss of staff. Inaccurate data may be due to clerical error or mistakes in programming. Total security is unachievable and some failures must be expected. The right level of expenditure on security measures will minimize the sum of the cost of the measures and the expected loss. The package cost, although small in relation to your other costs, is higher than a paper-based system. Businesses may need to purchase yearly maintenance and support for the accounting package. ...read more.

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