ACC 102- Principles of Accounting

INTRODUCTION The computer information age of the 21st century led to the use of computerized accounting systems by different organizations. This is a departure from the manual system. However, most of the accounting source documents in Nigeria such as invoices, a receipt is prepared manually by small businesses except a few organizations whose accounting system is fully computerized to the extent of generating computer-based invoices and receipts. This unit focuses on how accounting data are recorded using both manual and mechanical methods

2.0 OBJECTIVES At the end of this unit, you should be able to: i. Explain the manual accounting system. ii. Discuss computerized/mechanical accounting systems. iii. Know the procedure for preparing accounting data using the manual method ii. Understand how accounting data can be prepared mechanically.

3.0 MAIN CONTENT 3.1 Manual Accounting System The manual accounting system refers to the keeping of accounting records by hand-written of relevant posting in the books of accounts. It means that electronic device such as a computer is not used in posting. 14 The computerized information systems enable some companies to use different accounting software for financial records, but some organisations still prefer the manual system for one reason or the other. Some of the advantages of a manual system over a computerised system are: i. A manual system is cheaper to install in terms of cost when compared with a computerized system of maintaining financial records. ii. The cost of acquiring a computer, accounting software and training of account personnel in a computerised accounting system are not required for a manual system. iii. A manual system may be more secure because the possibility of computer crash and virus do not affect it. Some of the disadvantages of manual system are: i. It is highly prone to more mistakes and errors because humans factor do all the calculation without electronic assistant which a computer can generate with ease. ii. The manual system takes longer time, efforts and paper to post. iii. The security of the manual system is threatening because it is prone to destruction by flood and fire deface without any back-up. iv. Auditing of manual accounting system is cumbersome because documents have to be checked and identified one after the other. v. More space is required to keep manual accounting record because they are always voluminous. vi. It takes more time to effect changes and correct mistakes in a manual system because it may require redoing a posting from the subsidiary books to the ledger.