Advantages and Disadvantages Computerized Accounting


Meaning of Computerized Accounting

At present, accounting transactions are no longer recorded with the help of pen and paper using ledger books. After the invention of computers, digitalization came into existence, each and every sector in the economy started moving from paper-based systems to computerized systems. So as the accounting system is doing.

The meaning of computerized accounting is recording, classifying, summarizing, analyzing, and reporting business transactions in an electronic form.

Whereas, a Computerized accounting system is software that helps in performing and managing business transactions, reports in a more efficient and effective way. 

Advantages of Computerized Accounting

  • Accuracy: As compared to paper-based accounting, computerized accounting give more​ accurate results. In this system, data needs to be entered and the rest of the calculation is done by a computer. Also, there are lots of functions that are performed by accounting software including reconciliation, period end adjustment etc. The head Accountant need not check every time if a new member or staff enters new input data.
  • Speed: The computer is already known for faster speed. When it comes to accounting, it is faster than ever before. Everything can be created in accounts with just one click.
  • Security: The latest technology has developed integrated protection software where accounts can be saved for a longer period of time. It also gives password protection and access control.
  • Cost Efficient: Computerized accounting is efficient and economical than paper based​     accounting. Nowadays some companies offer monthly subscriptions at lower charges.
  • Automation: In the case of invoice building software, invoices are processed automatically​ and it saves time and energy. Once all the details were entered, the computer automatically processed. 
  • Minimize Calculation error: calculation in a computer is error-free​ unless the data is entered improperly.
Advantages and disadvantages Computerized Accounting
Advantages and disadvantages Computerized Accounting

Disadvantage of Computerized Accounting

  • High Cost of Installation: The cost of the Computer and its accessories are costly. Computer hardware requires lots of maintenance, repair and software need subscription fees. After some time of purchasing a system, its new version comes into the market and makes the old system become outdated.
  • Training Cost: Operating a computer is not an easy task. A person needs to be well trained and skilled to use a computer. Knowledge of accounting software is also necessary to do accounting.
  • Time-Consuming: Once there is any default in the system it takes a lot of time and effort to restore the system. Sometimes computers work slow due to weather and require air-conditioned room to work properly.
  • Maybe Hacked: In today’s era, it is easy to hack someone’s security system. Viruses and Malware can be entered into the system by hackers that cause danger to data. New generation computer comes with strong security it can combat this problem.
  • Health Issues: It puts a lot of strain on the eyes. also excessive use of computers leads to muscular pain which results in inefficiency and higher health expenses to the employees.