Manual vs Computerized Accounting – Difference and Comparison

What is Manual Accounting?

Manual accounting is the conventional way of maintaining financial records. The tools of manual accounting are tangible registers and account books. These essentials are found in any office that uses manual accounting to keep a record of its finance. The repository of all information in manual accounting is an entry book. The aforementioned book is a specially designed book with many sections and boxes – each storing a different mathematical or alphabetical value.

The process of manual accounting involves record maintenance through an entirely manual method. The involvement of steps entirely done by hand makes this method relatively slower and hard to manage. In the world of modern accounting and finance, manual accounting has almost become obsolete for a lot of reasons. It’s costlier and does not allow feasibility. Manual accounting was done infrequently when its need was dire.

The most critical drawback of manual accounting was the inability to store a larger number of transactions. Even if keeping was possible, retrieving relevant information about a financial transaction was hectic. In this method, it was also necessary to have a trial balance. An accountant manually does the mathematical operations involved in it. Thus it used to take more time to process data for later availability. Moreover, in manual accounting, there is always a need for adjusting entries in case rectification of error is required.

What is Computerized Accounting?

Computerized accounting is a modern and more equipped method of accounting – referring to the use of computers, digital tools, and software to achieve the purpose of accounting. This sort of accounting is more feasible because computers make it easier to store all transactions. The repository of information in computerized accounting is a dedicated database. All transactions and their particulars are stored in the database to be retrieved in case of need.

The process of adding transactions to the database is partially manual in computerized accounting. However, it does not require a manually working accountant to perform all accounting operations. The accountant must provide input and instructions required to start the accounting process. It is, therefore, a quicker way to handle thousands of transactions in a matter of seconds.

Moreover, the frequency of computerized accounting is regular and is not conditioned by any sudden necessity of information. The chances of erring are lesser in computerized accounting because it is not probable that the computer would make any calculation mistake. There is also a need to adjust entries for the sake of error rectification. The large-scale data backup system is another peculiar feature of computerized accounting.

Difference Between Manual Accounting and Computerized Accounting

  1. Manual Accounting is the conventional way of recording transactions, whereas computerized accounting is advanced and more efficient.
  2. Manual accounting is relatively slower in storing and processing, whereas computerized accounting allows for faster storage, retrieval, and processing.
  3. Manual accounting requires a tangible entry book to store data, whereas computerized accounting uses a database to store.
  4. Manual accounting does not have a full-fledged backup feature, whereas computerized accounting allows for backup.
  5. Manual accounting is infrequent and need-driven, whereas computerized accounting is regular and frequent.

Comparison Between Manual Accounting and Computerized Accounting

Parameters of ComparisonManual AccountingComputerized Accounting
StorageEntry BookDigital Database