Diploma of Accounting: Benefits of Computerized Accounting

This report examines the transition from manual to computerized accounting systems, highlighting the advantages of the latter. It details the evolution of accounting practices, emphasizing the increased speed, storage, and processing capacity offered by technology. The report explores the components of computer-based accounting systems, including hardware and software, and discusses data protection methods such as user verification, malware protection, and data backups. It also covers ethical considerations, financial legislation compliance, and the importance of budgetary control. The report recommends the use of computerized accounting systems for efficient record-keeping, faster data access, and increased accuracy, providing a comprehensive overview for accounting students. The report references several academic sources to support its claims and recommendations.

Running head: Diploma of Accounting 1
Diploma of Accounting
Author’s name:
Institutional Affiliation

Diploma of Accounting 2
Diploma of Accounting
The standard system of accounting has traditionally been the prominent practice of
keeping records of financial transaction for organizations. The accountant had to keep and
maintain account records like cash books, journals, and ledgers, and manually compile a
summary of business deals and final financial reports (Sutera and Hughes, 2015). Technological
advancements have impacted to developing a variety of machines that execute different tasks
that relate to accounting. With the rapid changes in the technology, increased speed, storage, and
processing capacity are essential and modern accounting techniques are to be employed. The
achievements of an organization and the ramifications of transactions tend to rely on resource
optimization, faster judgment of financial decisions, and control. Frequent maintenance of
financial information is often necessary for efficient record keeping. (Gunawardana, 2015). The
use of a computer-based accounting system to keep and maintain accounting records is
convenient with the present-day technology.
A computer-based accounting system consists of a software package and the hardware,
that replace the manual method in recording and processing financial transactions. Hardware
refers to the working components and devices of the whole system. Software other hand consists
of modules, or small programs, each performing a specific function. The programs are linked to
enable data sharing. The system provides a platform for experts to analyze the financial course of
business and take appropriate precautions basing on the analysis. The system also requires
human personnel to feed in the economic data (Marriott, 2015). Computer-based accounting
systems are designed in a way that they can be personalized depending on the nature of the
business. However, the essential components are the same on diverse accounting systems.

Diploma of Accounting 3
Accounting systems consist of confidential data that should always be securely be kept.
For computerized accounting systems, data protection should be maintained through different
techniques such as verification. Computer systems must have login identifications and user
passwords that validate the user, allowing him to use the computer. Protection of the computer
system from viruses and malware also prevents data loss. Malware infections to the computer
system make it ineffective and unstable. Data can also be protected by standard backup to
devices away from the system premises for its safety. Lastly, physical protection of the computer
system from theft also prevents data loss (Yaftian et al., 2017).
A right record keeping system for an organization should be practiced to ensure its
smooth running and success. Personal finance records have to be stored for at least five years
while financial, employee and all records of fringe importance and capital gains should be kept
for at least seven years. Record keeping help in efficient working to meet legal requirements and
strengthen client and staff relationships (Banyi, 2014).
Ethical considerations for the handling of economic reconstruction should be taken into
account in the transition from manual to the computerized accounting system. Conflicts of
interest should be avoided. The clients' interests should first be considered in the development,
his information in the order should be kept confidential. The clients should be well informed of
the services offered by an organization and should be well advised of the consequences that may
arise with the provided services and their capacity to act (Papageorgiou, 2014). Generally, all
clients should be served with respect regardless of their age.
The financial legislation provides that all companies or organizations must keep
appropriate and adequate written financial statements that precisely explain its transactions,

Diploma of Accounting 4
financial performance, and position to allow for auditing (Staff, 2018). The reports must comply
with accounting standards and regulations. The income tax assessment acts are also provided to
ensure that all organizations are subjected to taxation by the national government. The records
can be generated and stored safely using computerized accounting system.
Budgetary control in the accounting system should be practiced. It refers to the
structuring of qualitative and quantitative terms of precise actions that need to be practiced and
the required procedure for the future so that the required course is taken. Budgetary control
principles include generating a target of actions that coordinates activities of the business,
keeping the real performances and coming up with appropriate comparisons in the analysis
(Collins et al., 2012). It ensures maximum utilization of available resources to get a significant
profit, creates a sense of awareness at all levels of management in the process of achieving the
planned targets and also provides for a means of self-examination and self-criticisms which is
essential for the success of the organization.
I recommend the use of computerized accounting system in the running and keeping of
the organization's information. The system requires a small space to keep financial records, thus
creating a larger working environment for the workers. The preserved data can be accessed at
any time with ease, computation of business statistics is faster and secure due to the automation
of the system. It provides a quick and reliable method of accounting with increased accuracy.

Diploma of Accounting 5
Reference
Sutera, C., & Hughes, P. (2015). The significance of Learning Manual Accounting Systems.
Review of Business Research, 15(4). doi: 10.18374/rbr-15-4.6
Gunawardana, K. (2015). An Empirical Investigation of the Computerized Accounting
Information Systems Frauds in Licensed Banks in Sri Lanka. SSRN Electronic Journal.
doi: 10.2139/ssrn.2932007
Marriott, P., Tan, S., & Marriott, N. (2015). Experiential Learning – A Case Study of the Use of
Computerized Stock Market Trading Simulation in Finance Education. Accounting
Education, 24. doi: 10.1080/09639284.2015.1072728
Staff, I. (2018). Financial Accounting. Retrieved from
https://www.investopedia.com/terms/f/financialaccounting.asp
Yaftian, A., Mirshekary, S., & Mihret, D. (2017). Learning commercial computerized accounting
programmes. Accounting Research Journal, 30(3). doi: 10.1108/arj-08-2015-0107
Papageorgiou, E. (2014). The integration of computerized accounting in the accounting
curriculum as an educational learning curve for students entering the business world.
South African Computer Journal, 52. doi: 10.18489/sacj. v52i0.191
Collins, D., Pasewark, W., & Riley, M. (2012). Financial Reporting Outcomes under Rules-
Based and Principles-Based Accounting Standards. Accounting Horizons, 26(4). doi:
10.2308/acch-50266
Banyi, M. (2014). The Accounting Choice to Record Share Repurchases. SSRN Electronic
Journal. doi: 10.2139/ssrn.2448042