Question

In your opinion, what has been the greatest benefit of the computerization of the accounting process? In contrast, what problems can result from computerized accounting systems? Explain your answers in detail and provide evidence that supports your point of view

Answer 1

Computerized Accounting involves making use of computers and accounting software to record, store and analyze financial data. A computerized accounting system brings with it many advantages that are unavailable to analog accounting systems as well as there are disadvantages also.

So, in my opinion, the following are the benefits and disadvantages in computerization of accounting process:

BENEFITS:

1. Time Saving: Since all the calculations are handled by the software, computerized accounting eliminates many of the mundane and time-consuming processes associated with manual accounting. For example, once issued, invoices are processed automatically making accounting less time-consuming.
2. Accuracy: Once the data is entered into the system, all the calculations, including additions and subtractions, are done automatically by software.
3. Reliability: Because the calculations are so accurate, the financial statements prepared by computers are highly reliable.
4. Cost-effective: Since using computerized accounting is more efficient than paper-based accounting, than naturally, work will be done faster and time will be saved.
5. Visuals: Viewing your accounts using a computer allows you to take advantage of the option to view your data in different formats. You can view data in tables and using different types of charts.

DISADVANTAGES:

1. Potential Fraud: More software data being housed in the cloud, there are more opportunities for hackers to get your business's financial data and use it.
2. Cost Of Training: To ensure effective and efficient use of computerised system of accounting, newer versions of hardware and software are to be introduced. These require special training and hence, cost is incurred to train the staff personnel.
3. System Failure: The danger of a system crashing due to some failure in hardware can lead to subsequent interruption of work. This is more when no back-up is made.
4. Fear Of Unemployment: On account of the introduction of computerised accounting system, the employees feel insecure that they may lose employment and show less interest in computer related work.
5. Limitations Of Software : The software is developed on the basis of the experiences of the team of developers. As such, it may not be able to deal with a specific problem that may arise.