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Accounting information system is a system of records, usually computer based, which

combines accounting principles and concepts with the benefits of an information system and
which is used to analyze and record business transactions for the purpose to prepare
financial statements and provide accounting data to its users. Some accounting information
systems are still manual, i.e. accounting records are made with a pen, paper and manual
entries into accounting books.

How are Such Systems Used?

These systems can be customized to meet the needs of a business. For example,
information technology professionals responsible for business processes and information
technology professionals responsible for the accounting information system can work
together to develop and implement such a system so that it automatically gets information
from other sources already in use by the business. Also, the systems can be set up to
feature certain functions that are important to the business and eliminate functions minor to
the business. Information can be automatically fed, or manually fed into a business
accounting information system at whatever pace and however often it is necessary.

What are the Benefits of Using Accounting Information System?

Businesses use accounting information systems to make their accounting activities easier,
quicker, and more accurate, since accounting records are analyzed and financial statements
are prepared within the system, which allows to safe time of employees and avoid
mistakes. Since many accounting information systems are equipped with error-reducing
mechanisms and gather information regarding transactions electronically and automatically,
data entry and computing errors are rare. Also, as mentioned above, since such systems are
often automatically populated with transaction information, many accounting processes are
less cumbersome and time-consuming when using such system.

Of course implementation of such system requires investment and time to be spent on the
implementation, however future benefits are much higher that the expenses incurred. Also
to consider whether business needs accounting information system and what kind of system
is required thorough analysis of business and accounting processes has to be made to
determine precise requirements.

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Manual Accounting Versus Computerized Accounting
Max webber

Every company applies accounting because it is generally accepted that companies have to reveal certain financial
and management information to the government and public users and of course because accounting is indispensable
tool in business decision-making process. With the development of information technologies there were developed
many computer products (software) that make accounting as easy as ABC for those who uses them. From this point
accounting can be divided into two basic categories: those which apply manual accounting and those which prefer
computerized accounting systems. This paper is targets the main features of manual and computerized accounting,
their benefits and shortcomings, and their comparison.

Let's return to the main issue of the paper. Manual accounting implies that employees perform the whole accounting
cycle manually on a periodic basis: they calculate trial balances, journalize transactions, prepare financial statement
reports and other routines. Of course it takes much time, resources and effort in large organizations.

Computerized accounting implies that the only thing that employees do is recording transactions into the computer
which processes the other steps of accounting cycle automatically or by a request. But this is a very simplified view
on the computerized accounting because transaction is a complex category which includes not only sales or
acquisitions, but depreciation, premiums and wages calculation, dividends etc. So computers provide accurate
calculations and smart reports but it takes much time, resources and effort too and it's difficult to assess which
accounting type is more fast and economic.

If manual accounting requires qualified accountants to keep a record of business transactions, computerized requires
accountants which can use specific software and thus they cost more. Computer software calculates faster but it
does not know what you need until you can clearly explain what exactly you need. In addition good computerized
accounting system can cost thousands and even millions dollars, depending on the complexity and the size of
organization. Computerized accounting provides better internal control report system for any given period of time
(computer can control thousands indicators simultaneously and create notifications to the appropriate departments or
workers if some indicators do not correspond to the normal state), while manual control takes more time.

Among the advantages of manual accounting there are:

comparatively cheap workforce and resources, reliability, independence from machines, skilled workers availability;
the disadvantages include: reduced speed, increased effort of accountants, relatively slower internal control reporting,
routine work and some others.

Among the main advantages of computerized accounting there

are: high speed and mobility of reporting, reliability, no routine work, increased accuracy, internal control system of
increased productivity, easy back up and restoration of records; the disadvantages include: extremely high costs on
developing, introducing and using the system, special trainings for personnel, increased personnel costs,
dependence on machines etc.

Obviously both computerized and manual accounting have advantages and disadvantages but they perform the
same task, and the final result is the same. The main differences between them are the costs, speed and mobility.

Thus small and medium businesses usually prefer manual accounting without detriment to quality while large
corporations apply complex accounting systems which cost millions dollars but the effect from their application
exceeds all the expectations.

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Manual And Computerized Accounting

There is a critical difference between manual accounting and computerized accounting which just can't be measured
by simple scales, since for decades the traditional accounting has been the same and computerized accounting has
evolved in large leaps.

In a little manual accounting Vs computerized accounting kind of perspective, what kind of benefits does manual
accounting really has? True that the human factor will be stronger, and this may be great if you need to have a
stronger presence face to clients who surely want to be answered quickly and talk with people who can talk with
people, rather than accountants who can only talk with machines. Of course, this sort of staff is more prone to errors
than those who rely more heavily on computerized systems.

It can be argued that there are disadvantages with the current computerized accounting in existence. Computer
systems are prone to damage like hardware malfunctions, virus, etcetera, plus the data can be far more easily
tampered with than the one written on hard media, like paper records. Additionally, you need specialized personnel to
handle these systems.

In the relatively long history of computerized accounting, evolution took place at a parallel pace with the evolution of
the computer itself. As machines gained more processing power and more storage power, they were able to be used
to store larger amounts of information, which for accounting is essential, but, on top of that, they gained more
processing power. Now you are capable with just a few samples of data inserted into a spreadsheet to have whole
salary sheets for an entire company produced in minutes.

This is the difference between manual and computerized accounting, it's how in one case you may have the human
presence to interact with other people, but you'll have to sacrifice efficiency and money. Computers can do the same
job for less pay, so to call it, and create a more efficient corporation.

Small companies may fare well without the heavy assistance of computers, which may allow working with traditional
accounting. If a large company however wants to survive, it simply cannot rely on a large accounting department, as
errors are bound to happen and at some point that will be more critical than what you'd otherwise expect.

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Advantages

Faster and efficient in processing of information;

Automatic generation of accounting documents like invoices,
cheques and statement of account;
With the larger reductions in the cost of hardware and software and
availability of user-friendly accounting software package, it is
relatively cheaper like maintaining a manual accounting system;
More timely information can be produced;
No more manual processing of the data- all automatically been
posted to the various ledgers/accounts and
Many types of useful reports can be generated for management
to make decisions

Disadvantages

Power failure, computer viruses and hackers are the inherent

problems of using computerized systems;
Once data been input into the system, automatically the output are
obtained hence the data being input needs to be validated for
accuracy and completeness, we should not forget concept of GIGO
(Garbage In(Input) Garbage out ( Output) and
Accounting system not properly set up to meet the requirement
of thebusiness due to badly programmed or inappropriate software
or hardware or personnel problems can caused more havoc and
Danger of computer fraud if proper level of control and security
whether internal and external are not properly been instituted.