Computers and Accounting

By Schwartz, Marlyn A. | The National Public Accountant, May 1990 | Go to article overview

Computers and Accounting


Schwartz, Marlyn A., The National Public Accountant


Computers and Accounting

I recently attended a seminar on education in accounting. It was sponsored by a publisher of accounting textbooks and attended primarily by college accounting instructors. The lunchtime discussion as well as part of the program concerned the use of computers and computer software in accounting offices. Of course, there were all the usual pro's and con's, but one fact seemed certain: computers, if not already there, will soon be a major-component of any accounting practice. And accountants are finding that their clients are making extensive use of computers in their businesses, so here again it becomes essential to have a knowledge of computers and computer usage. With these facts in mind, let's take some time to compare manual and computerized accounting systems.

In manual accounting systems, all entries are handwritten and all records are prepared by hand, although admittedly with the aid of a calculator. Initial transactions such as sales and payables are recorded in specialized journals and then posted manually to the subsidiary journals and/or to the appropriate general ledger accounts. At the end of an accounting cycle, whether monthly, quarterly or annually, worksheets are set up, adjusting entries are made, and financial statements and reports are prepared.

In a computerized accounting system, the same basic components must exist. There will be receivables, payables, inventory, payroll and depreciation, all of which must be recorded and properly processed to give the same end product--reliable financial statements and reports. An individual must make the initial entry whether it is handwritten or keyed into a computer. So just what is the difference, and what are the advantages?

A major and very significant difference is "integration." When a transaction is entered in the computer, it is then carried to all parts of the system. For example, to record a sale, the invoice amount is posted to a sales journal, to a subsidiary accounts receivable ledger and to the general ledger. This information will be used to update sales reports, accounts receivable reports and client billing statements as well as the financial statement. …

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