The Shift to Digital
In a computerised system, the accountant enters the initial transaction (the Input), and the software automatically performs the posting to ledgers and the calculation of the trial balance (the Processing).
1. Manual vs. Computerised
Manual Systems
- High risk of arithmetic errors.
- Time-consuming (double entry done by hand).
- Requires physical storage space.
Computerised Systems
- Instant calculations (arithmetically accurate).
- Automatic document generation (Invoices/Statements).
- Large data stored in small digital files.
2. The Main Advantages
- Speed: Reports like the Income Statement can be generated in seconds.
- Accuracy: Once the initial data is correct, the software won't make addition errors.
- Integration: Sales records automatically update inventory levels.
The Disadvantage
- Initial cost of software and equipment
- Need for trained staff
- Risk of data loss due to technical problems
- Dependence on electricity and computer systems
3. Security & Integrity
Because digital data can be lost or stolen, businesses must take specific precautions:
- Passwords: Restrict access to authorized staff only.
- Backups: Keeping copies of data off-site or on the cloud.
- Firewalls: Protecting against hackers and malware.
- Audit Trails: Records of who changed what data and when.
Examples of Accounting Software
- QuickBooks
- Tally
- Sage
- Xero
- Microsoft Excel (for small businesses)
Quick Check
1. In a computerised system, which task is still the responsibility of the accountant?
View Correct Answer
Correct Answer: B. If you enter the wrong number (Input), the computer will process it incorrectly. This is called "GIGO" — Garbage In, Garbage Out.