Manual Vs Computerized Book Keeping

Manual book keeping: - in it we first create ledger, carry forward previous year’s closing balance as opening balance for the current year record cash transaction in cash book and non-cash transactions in journal, then amount from cash book and journal are posted into respective ledgers. Whenever we need to know balance of any ledger. We acquired to total amounts in both debit and credit columns of the ledger and compute the difference to derive the closing balance for the ledger as on the date to prepare final accounts (profit and loss & balance sheet) for any period, you have to compute closing balance of ledger for the period. And then prepare a trail balance from trail balance you post nominal account to profit & loss a/c real & personal ledger to balance sheet.  Next year when we create New Year book we have to repeat whole the process again.

 

Computerized accounting: - when we opt for computerized accounting first time we have to create all the ledgers and enter opening balance (in subsequent year we need to create the ledges again or carry forward previous year’s closing balance as opening balance since it would be carried forward on its own by the software) and classify at this stage. Thereafter you enter all transaction in vouches(different type of vouches to record diverse nature of transactions) that’s all you have to do and everything else (like posting to ledger preparation ) that’s all you have to do and everything else (like posting to ledger, preparation of trail balance, final account etc.)is done by the software In computerized accounting, while creating new ledger, you are required to classify it suitably under relevant accounts group to tell the software the nature of the ledger and where it will appear. This is necessary at this stage as all reports are prepared on line the moment you enter transactions (vouches). In case of manual book keeping this classification is done at late stage (after preparation of trail balance, nominal accounts are transferred to profit & loss accounts through journal entry, real and personal accounts are posted to balance sheet under propel heading i.e., groups).

 

YEAR END ENTRIES

 

In manual book keeping we required to pass journal entries to transfer closing balance of all nominal account to prepare profit and loss accounts, which we are not required to do in case of composited accounting. The software does this job on its own. In next year, only closing balance of teal and personal accounts are carried and nominal accounts balance is zeroed by the software (for which we pass journal entries in manual book keeping). The advantages are that our accounts are always open any modification is instantly reflected.