Question

1. As a professional accountant, how would the process for completing the practice set assignment (a manual accounting process) be used in an accounting department. Explain whether communication, teamwork, time management and interpersonal skills play a role in completing this process within an accounting department?

2. When (why) would you use this manual accounting system rather than a computerised accounting system?

3. What are the benefits and limitations of each type of system (manual vs computer)?

Answer 1

1.Accounting Process

Manual accounting systems are most commonly used by small businesses, as these systems have lower upfront cost less than complex accounting software and are relatively easy to use.Before the age of computerized financial systems, all accounting processes were performed by hand, using paper and pencil.

Accounting cycle refers to the specific tasks involved in completing an accounting process. The length of an accounting cycle can be monthly, quarterly, half-yearly, or annually. It may vary from organization to organization but the process remains the same.

a.Collecting and analysing documents.

b.Posting in Journal.

c.Posting in Ledger accounts.

d.Preparation of Trial Balance.

e.Posting of adjustment entries.

f.Create Adjusted Trial Balance.

g.Prepare Financial Statements.

h.Post Closing entries.

i.Post Closing Trial Balance.

1,b,Role of Communication ,Team work ,Time Manangement and Interpersonal skills in completing the accounting process

Communication.

Communication plays an essential role in increasing efficiency of employees. Employees need to interact with each other more often to break the ice and feel comfortable at the workplace. Problems arise when information does not flow in its desired form. Effective communication facilitates free flow of information among employees and reduces misunderstandings and confusions. Effective communication ensures that everyone is on the same page.

Team Work

Team work is essential in corporates for better output and a better bonding among employees.An individual will definitely take more time to perform if he is single handedly responsible for everything. When employees work together, they start helping each other and responsibilities are shared and thus it reduces the work load and work pressure.Team work also reduces the chances of unnecessary conflicts among the employees and every individual tries his level best to support his team member. In a team, every team member has an equal contribution and each team member comes out with a solution best suited to the problem.

Time management

Time management skills are important because they help you structure your work in a way that allows you to accomplish goals.Setting aside specific amounts of time per day will help you complete the necessary steps to getting a job.Managing your time well also allows you to have space to be creative and proactive with your goals.

Interpersonal Skills

Interpersonal skills are the behaviors and tactics a person uses to interact with others effectively. In the business world, the term refers to an employee's ability to work well with others. Interpersonal skills help us interact with others effectively, on the job and in the larger world.The skills are important as it is needed to get a work done effectively.

2. Why and When Mannual Accounting System is used.

Manual accounting systems are most commonly used by small businesses, as these systems have lower upfront cost less than complex accounting software and are relatively easy to use. New or small businesses may not have many financial entries to make and, therefore, their accounting needs are simple. As long as the person in charge of manually keeping the financial records knows what he or she is doing, it can be just as accurate as a computerized accounting system. Another advantage of using a manual accounting system is that you can always open up the book and gain instant access to your records. There is no delay due to power or Internet outages, and there are no risks of sensitive information being hacked online.

3.Advantages and Disadvantages of Mannual and Computerized Accounting System.

Advantages and Disadvantages of Mannual Accounting System

Advantages of Mannual Accounting System

One of the benefits of using a manual accounting system is that you know your documents will always be available when you need them.It avoids Corrupt data.

It is always accessible.Power or internet outages won’t prevent you from working on accounts .

There will be no duplication errors in mannual acccounting system.

Another advantage of manual accounting systems is that they are easier to make changes to. When you need to change an entry on your ledger, you simply take an eraser and erase the entry.

Disadvantages of Mannual Accounting System

Data entry Errors is there in this type of accounting system.Double-entry accounting in a manual system is laborious, since every transaction must be recorded by hand, twice.

Potential loss of Physical Copies.Journals and ledgers, being physical books, are prone to loss. Theft or fire could mean that all of a company’s accounting data is lost. Duplicating and storing the general ledger off-site can be a time-consuming task, compared with many digital storage options.

Knowledge of accounting procedures.Unlike many commercial software packages, manual accounting system aren’t optimized for ease of use, nor can you expect client support or proprietary help.

Advantages and Disadvantages of Computerized Accounting System

   Advantages of Computerized accounting system

Faster Processing

Reliabilty is more in this sysytem.

Accurate information with less errors.

Easy availabilty of information.

Up-to-date information is available in this type of system.

  The computer based accounting system ensures better use of time and resources.

  Computer based systems require a fractional amount of physical space as compared to the books of accounts in the form of journals, ledgers and accounting registers.

Automated Document Production.

It is easier to monitor and control the business using the real time management information reports generated by the computerized information systems.

Disadvantages of Computerized Accounting System

Heavy Cost of Installation.

Time Consuming.

  To ensure effective and efficient use of computerized system of accounting, newer versions of hardware and software are introduced. This requires special training and cost is incurred to train the staff personnel as specialists.

Fear of unemployment.

The danger of a system crashing due to some failure in hardware can lead to subsequent loss of work.

Unlike human beings, computers do not have the capability to judge or detect unanticipated errors in the system.

The danger of viruses and hacking into the system from outside creates a strong need for security of system.

Extensive use of computers may lead to many health problems resultantly reducing working efficiency .