Accounting software not only processes data and creates reports much faster than manual systems, but also allows faster data entry. Overall computerized accounting will save you a lot of time, as it allows documents such as invoices, purchase orders and payroll to be collated and printed quickly and accurately.

Computers helps businesses by making their staff efficient , productive and also save their valuable time. It helps to maintain business and all financial information for the business is well-organized. 1) Time and cost savings : Using a computerized accounting system saves companies time and money.

In manual accounting, recording of the transaction can be done through the book of original entry, i.e. journal day book. Conversely, in computerized accounting, the transactions are recorded in the form of data, in the customised database. In manual accounting, all the calculations, i.e. addition, subtraction, etc.

List FIVE advantages of a computerized system over a manual…

• 1.In computerized systems,there is very low possibilities of error when handling data.
• Computerized system uses a small space to keep records.
• Computerized system is a secure way of keeping records.
• 4.It is cheaper.
• Computers can do any work repeatedly without getting tired or bored.

Manual record keeping

• Less expensive to set up.
• Correcting entries may be easier with manual systems, as opposed to computerised ones that can leave complicated audit trails.
• The risk of corrupted data is much less.
• Data loss is less of a risk, particularly if records are stored in a fire-proof environment.

One of the most important advantages of a computerized system is it saves time for businesses. Other advantages include automation, accuracy, cost-effectiveness and easy data access. In addition, computerized systems are secure, have high speed, are scalable and reliable.

A computer system is a set of integrated devices that input, output, process, and store data and information. Computer systems are currently built around at least one digital processing device. There are five main hardware components in a computer system: Input, Processing, Storage, Output and Communication devices.

Advantages and Disadvantages of Using Computers | MIS

• Speed: The speed of carrying out the given instruction logically and numerically is incomparable between a computer and human being.
• Accuracy:
• Versatility:
• Reliability:
• Storage:
• Automatically:
• Compactness:
• Repetitiveness:

What are the disadvantages of a computer?

• Too much sitting.
• Carpal tunnel and eye strain.
• Short attention span and too much multitasking.
• Potential of loss of privacy.
• Can limit learning and create a dependency.
• Time sink and lots of distractions.
• Can reduce jobs.
• Increases waste and impacts the environment.

Challenges of manual processes

• Time consuming and inefficient. Manual accounting processes use paper documents and ledgers that take time to sort through, record and process through the system.
• Prone to errors.
• Lack of visibility and control.
• Manual invoice approval process.
• Lack of security.

The following are the rules of debit and credit which guide the system of accounts, they are known as the Golden Rules of accountancy:

• First: Debit what comes in, Credit what goes out.
• Second: Debit all expenses and losses, Credit all incomes and gains.
• Third: Debit the receiver, Credit the giver.

Take a look at the three main rules of accounting: Debit the receiver and credit the giver….

• Debit the receiver and credit the giver.
• Debit what comes in and credit what goes out.
• Debit expenses and losses, credit income and gains.

To apply these rules one must first ascertain the type of account and then apply these rules.

• Debit what comes in, Credit what goes out.
• Debit the receiver, Credit the giver.
• Debit all expenses Credit all income.

Rules for Debit and Credit

• First: Debit what comes in and credit what goes out.
• Second: Debit all expenses and credit all incomes and gains.
• Third: Debit the Receiver, Credit the giver.

Examples of debits and credits

• Repay a business loan: Debit loans payable account and credit cash account.
• Sell to a customer on credit: Debit accounts receivable and credit the revenue account.
• Purchase inventory from your vendor and pay cash: Debit inventory account and credit the cash account.

What are debits and credits?

Liabilities are simply things that the bank owes to other people, organisations or other banks. Contrary to the perception of most of the public, when you (as a bank customer) deposit physical cash into a bank it becomes the property (an asset) of the bank, and you lose your legal ownership over it.

However, for a bank, a deposit is a liability on its balance sheet whereas loans are assets because the bank pays depositors interest, but earns interest income from loans.

The accounts carrying a debit balance are Bank Account, Bank Loan, Interest Expense, and Office Supplies Expense. The Owner Equity account is the only account carrying a credit balance.

What Is a Loan Receivable? Financial institutions account for loan receivables by recording the amounts paid out and owed to them in the asset and debit accounts of their general ledger. This is a double entry system of accounting that makes a creditor’s financial statements more accurate.

Discounts allowed represent a debit or expense, while discount received are registered as a credit or income.

Journal Entry for Discount Allowed

When the seller allows a discount, this is recorded as a reduction of revenues, and is typically a debit to a contra revenue account. When the buyer receives a discount, this is recorded as a reduction in the expense (or asset) associated with the purchase, or in a separate account that tracks discounts.

An invoice is issued to a customer for 700, and after payment is made, the business agrees to give a discount of 150 to the customer. To allow for the discount, the business issues a credit note to the customer for the difference of 150….Credit Note for Discount Allowed Journal Entry.

Cash Discount is allowed to the customers to whom goods sold on credit. Cash discount is an indirect expense and to be debited to profit & loss account.

A ‘direct cost’ is a cost incurred to create your sales . i.e. if you produced birthday cards for example your direct costs might include card, envelope and any ink used. An expense is a cost that you would incur regardless of any sales .