The process in which the accounts are handwritten on the paper-based register in the form of ledgers, subsidiary books, and journals to record the financial transactions is called Manual Accounting. The process in which the financial accounts are systematically accounted through specially developed computer accounting software.
The following are the differences between a computerized accounting system and manual accounting:
| Basis | Comuterised Accounting | Manual accounting |
| Time taken | The process of accounting is much faster, more reliable, and easy. | Time taking process and it is not quickly done. |
| Internet use | Extensively use Internet facilities for their online operations. | It does not require an internet connection. Forwarding the records to another place is difficult. |
| Human errors | The chances of human error in recording the data are very low. | The chances of human error in recording the data are high |
| Money saving | Saves costs by automating and streamlining financial processes, which can reduce the need for manual data entry and multiple spreadsheets. | Cost-effective. Does not require highly expensive software equipment like computers and computer accessories. |
| Data Security | Accounting software plays a significant role in safeguarding sensitive financial data. Advanced encryption, access controls, regular audits, and backup systems help protect against online thefts and hacking. | The data is much more secure and protected against all cyber-attacks or online thefts |
| Storage facility | The physical space to store the documents is not required as everything is digitally stored, and a limited physical space sufficient for a computer is only needed. | The physical storage of accounting books requires a lot of physical space or dedicated racks or shelves to store the records, registers, etc. |
| Edibility | Any changes can be performed easily as it’s easy to edit things in a computer system and doesn’t have to redo the whole work again. | It is much more difficult to edit the report or make changes once entered manually, a whole page has to be re-entered if any mistake occurs. |
| Technology requirement | A computerized accounting system requires the following technology: Computer: The system should be able to run on multiple platforms. Software: The software should be affordable to install and maintain, and should be easy for users to understand. It should also have advanced features like multi-user access, data import and export, and authenticity checks. Security: The software should protect the data and software from unauthorized access. | Usage of technology not required for maintenance for manual accounting. Data is always available to access and use as every record is done physically. |
| Back-up requirement | Since a computer is a machine, technical problems like software freezing, system not responding, data crash, etc., may arise if proper maintenance is not done. So a backup is always important, to prevent any unexpected data loss. | Back-up for physical data is not necessary unlike computerized accounting, where a backup is always important, like having a photocopy of the original records to prevent any unexpected data loss. |
| Additional devices and requirements | Computers, Mobile devices, Servers, Printers, Surge protectors, Routers, Storage media, and A backup power supply are required. Other components of a computerized accounting system include: software, data, people, procedures, and internal controls. | Most of the calculations are done manually. However, for some tough calculations additional devices, like a calculator are used. |
| Tracing records and identifying transactions | In this accounting, the tracing of reports or identifying transactions is fully automatic and quick. The software is designed to make accounting tasks easier. | In a manual accounting system, reports are created by transcribing transactions from books and journals into financial reports. It is a labourise job to identify transactions and tracerecords. |
| Saftey | Exposed to chances of cyberattacks to steal the data unless it is strongly secured using advanced anti-hacking software, as this process requires the internet. | It is difficult to store records everywhere, as they can be misplaced or damaged. |
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