The Two Most Widely Used Accounting Systems
The two most widely used accounting systems in the world are manual and computerized accounting systems. Despite the fact that both programs need an individual to track purchases, they have some distinguishing characteristics in terms of workability and reliability.
Manual Accounting System
For one thing, the manual accounting scheme is a system in which the workers who are hired are those who have made it into the accounts database according to the registry. As a result, everything is done by hand. They can not use computers to keep track of the transfers.
The manual accounting scheme allows for clerical errors such as measurement errors, among other things. However, this kind of system is lasting as it is easier to maintain for a longer time frame. It also allows for employment since there would be a need for an employee to keep the manual records.
Computerized Accounting System
The computerized accounting, on the other hand, entails maintaining the records using the computer. In this type of accounting, no manual calculation is used. The system carries out the calculations automatically. The computerized accounting system reduces the possibility of any errors. Moreover, the computerized method of maintaining the transaction is easier than the manual one.
Question Two
In manual accounting, all sales of goods or services to a customer are recorded in a multicolumn sales journal. Then the monthly totals are posted to the revenue accounts and account receivables related to the respective sales transactions. Besides that, there’s the daily update of sales transactions which is done simultaneously with the accounts receivable subsidiary ledger. All new receivables are recorded in the customer accounts in the subsidiary ledgers. Receipts from the customers on open accounts receivables and cash are recorded in the sales journal. The monthly totals are recorded to the general ledger accounts.
However, in computerized accounting and particularly QuickBooks, the Customer Center acts as the customer’s subsidiary ledger for the accounts receivables. There’s a file for all customers; whether individuals or companies who receive goods and services from the company. The customer file contains details like name, address, credit limit, and contacts. The invoice created on the “Create Invoice” window functions the same as that on the multi column sales journal. In QuickBooks, an entry in the Customer Center updates all the corresponding customer’s accounts. Furthermore, QuickBooks automatically updates general ledgers and Chart of Accounts and also records the details of the payments receivable in the Customer Center.
Question Three
Adjustment of the journal entries is by the accrual basis accounting standards. It ensures that all the income and expenses allocations are recorded in the period in which they were incurred.
In the manual process of accounting, the general journal is the document that is used to record transactions originally and in chronological order. Hence a transaction is recorded as a debit and credit entry. This process is the same for all income and expense transactions. At the end of the accounting period, all the transactions are then recorded from the general journals to the general ledgers. Adjusting entries are also recorded in the general journal. This practice is done every once a month or periodically. The adjustments are made on the date that the company’s financial statements are prepared.
QuickBooks, on the contrary, adjusts its journal entries through the “Make General Journal Entries” window which automatically updates all reports and balances. One will rarely experience any default account settings for QuickBooks because each entry is unique.
