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Difference between Manual and Computerised Accounting

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  • Last Updated : 02 Aug, 2022
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Accounting is the process of maintaining the financial accounts of a business or organisations every financial year for the audits and the entry of data to record financial accounts monthly, quarterly or annually, either handwritten manually or computerised using certain accounting software. Due to the modern techniques, nowadays most of the accounts are done through computer software. Only a few small businesses and companies use manual accounts today.

Manual Accounting:

The process in which the accountants prepare paper-based handwritten accounts in a register in the form of ledgers, subsidiary books and journals to record the financial transactions is called Manual Accounting. Manual accounting is time taking process, and it is not quickly done. The chances of human error in recording the data is high in manual accounting, and it needs an employee to perform such a job. It is also cost effective and may not require any highly expensive equipment, like computers. The data is much more secure and  protected against all cyber attacks or online thefts, as it does not require the internet.

Computerised Accounting:

The process in which the financial accounts are systematically accounted for using specially developed computer accounting software automatically in the form of PDF, Tally and Excel spreadsheet documents is called Computerised Accounting.  It is a very quick process, as everything is systematically automated using accounting software. It requires a computer and an operator to perform such operations. The chance of having any calculation error is very less or null, and it gives precise output as the software is designed with full automation like auto entries, organised framework and calculations, etc. It helps in maintaining the financial records and all transactional information easily, and produces account statements, tax liabilities, and other financial reports, which can be used to analyze the company’s operations, etc.

Comparison Between Computerised Accounting and Manual Accounting:

Basis

Computerised Accounting

Manual Accounting

MeaningComputerised Accounting is software-based operations done by specific account software which has an automatic framework.Manual accounting is the procedure where the financial accounts are recorded manually using physical registers, ledgers, and subsidiary books.
Time TakenThe process of accounting is much faster, more reliable and easy. All data is maintained systematically and accurate using the software.It is a time taking process and the records are maintained manually using paper based account books, and sometimes it is not accurate.
Margin of ErrorThe accounting through software is automated, and has very less chance of error and the transactions are precisely recorded.Since the accounting is done manually, so there is a chance of human error in calculations and accuracy.
ReliabilityIt is very reliable to store the information on the computer in the form of format documents like PDF, Microsoft Excel etc. and can be sent digitally anywhere in a fraction of seconds.Although it is not much easy to store the physical accounting books everywhere, as it can be misplaced or get damaged easily and cannot be sent anywhere easily as compared to Computerised accounting.
SafetyThere is a chance of cyber attacking to steal the data unless it is strongly secured using advanced anti- hacking software, as this process requires the internet.The Books can be kept safely and cannot be stolen easily, as it does not require any internet access to get stolen by cyber attacking.
EditableAny changes can be performed easily as it’s easy to edit things in a computer system and doesn’t have to redo the whole work again.It is much more difficult to edit the report or make changes once entered manually, a whole page has to be re-entered if any mistake occurs. 
TechnologyAs a computer is a machine so technical problems, like software freezing, system not responding, data crash, etc., can be occurred once in a while if proper maintenance is not done.It is exempted from such maintenance as this process does not require a computer and the data is always available to access and use as every record is done physically and stored safely. 
BackupEvery now and then, an online backup or external backup is highly preferred to get rid of any accidental hardware crash and data loss.The physical data is safe compared to computerised accounting, but a backup is always important, like having a photocopy of the original records to prevent any unexpected data loss.
Additional DeviceThe software does all the calculations automatically and accurately and doesn’t need any additional calculating devices.In manual accounting, all the calculations of transactions like adding, subtracting, multiplications, etc., are done physically and for some tough calculations, an additional device, like calculator is used.  
AutomaticIn this accounting, the tracing of reports or identifying transactions is fully automatic and quick.The identification of a particular transaction is manually done and can take some time to record it.
AccuracySince the process is based on accounting software, the preparation of Trial Balance is produced automatically and is accurate.In this process, the balances of accounts has to be entered manually in registers, which is a time consuming process. So the Trial Balance is manually prepared.
PhysicalityThe physical space to store the documents is not required as everything is digitally stored, and a limited physical space sufficient for a computer is only needed.The physical storage of the accounting books requires a lot of physical space or dedicated racks or shelves to store the records, registers, etc.
Used ByIt is mostly used by large companies and businesses where the number of transactions of transactions are more.It is used by small businesses and old-fashioned traders as they have less number of transactions.
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