Manual & Computerised Systems (Edexcel IGCSE Accounting)
Revision Note
Written by: Dan Finlay
Reviewed by: Lucy Kirkham
Manual & Computerised Systems
What systems can be used for bookkeeping and accounting?
Businesses can choose to use a manual accounting system
Manual accounting systems are common in very small businesses, or in those which have operated at a modest level for a long time
These systems include:
Physical journals
Physical ledgers
Alternatively, a computerised accounting system may be used, such as:
Accounting software (Sage, Xero, Quickbooks, etc) can be used for:
Receivables ledger accounts
Payables ledger accounts
Nominal ledger accounts
Cash books
Spreadsheets, such as Microsoft Excel or Google Sheets, can be used for:
Financial statements
Cash flow statements
Forecasts
Budgets
What are the benefits of using a computerised system over a manual system?
Calculations are completed by the software | Information is stored electronically |
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Financial information is readily available | Information can be processed quickly |
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What are the limitations of using a computerised system over a manual system?
There are a few limitations of using a computerised system
Accounting software costs money
There might be an initial installation cost
There might be subscription costs
Staff need to be trained to use the software
This will contribute to expenses
There are security issues
Data can be hacked just as physical documents can be stolen
Examiner Tips and Tricks
If you are asked to advise a business whether they should use a computerised system then give a balanced view. You should state and describe an advantage and a disadvantage, and then give an overall conclusion.
Worked Example
Khalid keeps physical records of his accounting information. He is considering whether he should change to a computerised system of bookkeeping.
Evaluate whether Khalid should change from his manual system to a computerised system.
Answer
State and describe an advantage.
Using a computerised system means that Khalid will be able to process the accounting information quickly. This means that he will have less time on bookkeeping and more time on other tasks.
State and describe a disadvantage.
There will be costs involved when using a computerised system such as installation and training costs. This means that the profits will be lower due to these costs.
Give an overall conclusion.
Overall, Khalid would benefit from changing to a computerised system.
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