Use of Computers in Accounting

It's rare to see a firm doing its bookkeeping using the old-fashioned columnar pad and pencil setup. Computers made a huge impact in the way that accounting work is performed, not just for the big firms, but for the small businesses as well. Accounting systems are affordable and relatively easy to use, making them a viable alternative for many businesses.

Management of a general ledger, the backbone of an accounting system, is a common use of a computer in the finance area. Account codes can be added or retired with ease, making the general ledger very flexible. Segments within the account codes can be designated for certain functions, facilitating reporting. For example, an accounting code for expenses could be setup in the system as 60235, The "6" means that the account is an expense, the "2" could mean a department, such as sales, and the "35" could identify a special marketing program within sales. This setup allows for easy query of expenses of a certain department or marketing program.

Paying bills often takes up lots of time and energy, especially when using the manual system. Using software, you can pay a bill and book the expense associated with the payment at the same time. You can pay your bills in batches and print all your checks at once, a major time-saver. No more handwritten checks or manually entered expenses. Once vendors are entered in the system, you don't need to write their names and addresses over and over--the software saves this information and you only enter invoice numbers and amounts with the rest pre-populated--a major benefit of computerized system.

Easy reporting is a well-known benefit of a computerized accounting program. Errors can be easily identified, corrected, and you can re-run reports in minutes--something that is impossible to perform using the manual system. Since all calculations are done by a computer, report accuracy is very high, increasing reliability of financial information. Once accounting data is put into the system, it can be compiled and manipulated through reports and queries that are usually easy to use and modify. Accounting systems offer a variety of reporting options, including the ability to export data to a spreadsheet, where you can manipulate the information.

Payroll, a sub-section of accounting, is often processed with computers and not by hand. Complex calculations, such as benefits and taxes, are performed by a computer, increasing correctness and efficiency. Changes can be made easily and in a timely matter. If an employee wants to increase his tax withholding, this information is entered in the system and the rest is processed by a payroll system. To minimize errors, time-sheets can be uploaded directly into the system without human intervention, a major time-savings to any firm with many hourly employees.