Computers are a fact of everyday life. It is hard to think of a business that does not use a computer. Computers have made things easier for many in the accounting profession. But there are also areas of concern that the user should be aware of.
Accounting Before Computers
Before the advent of computers, accounting work was manually entered into ledgers. Separate journals were kept for the different accounts, including receivables, accounts payable, inventory records, and so on. It was an expensive, laborious, and slow process. Later, calculators were used to help with the tabulating of numbers and billings. But the methods were still slow and fraught with errors. Many errors were made simply because of bad penmanship or faulty calculations.
Use of Computers in Accounting
Today businesses run at a breakneck speed. A global business climate demands even faster data processing. Both large and small companies benefit from accounting software programs. Computerized spreadsheets allow users to have real-time instant access to general ledger information concerning accounts receivable, accounts payable, inventory levels, purchase order status, sales, and labor costs.
Advantages of Computers
Two advantages computers offer businesses are speed and flexibility. Accounting functions are much easier to complete and require less labor when done by computer. Repetitive double entry accounting functions are accurate and accomplished quickly and easily. If a manager wants to try out a specific business strategy, such as expanding a production line, he can run quickly run different scenarios using a computer program and analyze his options.
Disadvantages of Computers
While using computers offers speed and ease, there are some disadvantages. Computers are only as good as the information they are given and may not discern errors in input or logic. Users can easily manipulate computers to embezzle from the company. Accountants need to take steps to protect company data from misuse, damage or hacking.