Computerized Accounting 

You hear a lot these days about computerized accounting. Just what is computerized accounting and how does it differ from other kinds of accounting?

Definition

As its name suggests, “computerized accounting” is accounting done with the aid of a computer. It tends to involve dedicated accounting software and digital spreadsheets to keep track of a business or client’s financial transactions.

History

For centuries, accounting was done using hand-written records usually kept in book form. Hence the terms “doing the books” and “bookkeeper.” When computers entered the consumer market in the early 1980s, many software companies developed electronic spreadsheet and accounting programs to take advantage of this emerging technology. One of the first “killer apps” in this field was Lotus 1-2-3, released by Lotus Corp., now part of IBM, in January 1983. Today, the computerized accounting field is dominated by Microsoft Excel, which is part of the Microsoft Office Suite, although there literally dozens of other accounting software packages available, such as Simply and ACCPAC.

Advantages

Computerized accounting has many advantages over traditional manual accounting. Computerized accounting tends to be more accurate, is faster to use, and is less subject to error than its manual counterpart.

Disadvantages

Computerized accounting also has some weaknesses every accountant and business needs to address. As with any computerized application, computerized accounting records are subject to hacking, viruses, malware and theft unless proper security measures are in place. Records must be backed up regularly — preferably to off-site servers — to prevent loss due to power outages, virus damage, fire and natural disasters.

Today, computerized accounting is used in businesses of every type and size. Anyone planning to enter the accounting field at any level needs to be familiar with its principles and operation.