Nowadays, everyone is looking for a computerized accounting system to do things better and faster. So why should accountants who use the internet all day to speed up their work consider using manual accounting or bookkeeping systems?
The answer is that while technology is the answer to many things, sometimes it’s like using nuclear bombs to kill ants. Sometimes too much firepower can do more damage than necessary. So if you’re running a simple business with relatively few transactions, you might be surprised to find that carbonation is better and easier than automated systems.
I recently had a new client because his former accountant urged him to use computer software to record his financial data. After trying it and feeling like he had no control over the accounting software, the client read it and met with a new accountant who was literally you. And after looking at the results, I agree that his old system wasn’t broken, so why fix it?
Quite apart from the benefits of a modern computer accounting system, whether it runs on Windows or Apple or even Unix systems, today’s accounting systems are often easy to use and make repetitive tasks faster. Using more computer checks means that most information is only needed once, making sending a check much easier and sometimes unnecessary.
With software from Peachtree, Intuit or Microsoft, it can look easy. Just review the checks and deposits and enter the statement balance, and the computer does the rest.
Services provided by the accounting firm.
There are many types of services provided by accounting firms. The scope of services provided by the accounting firm in the computerized accounting system varies depending on expertise and experience. The most common services include final accounting, external audits, tax services, business consulting services, and accounting system development.
External Audit:
External audit is one of the most important services offered by the accounting firm. It primarily focuses on the audit of critical financial statements by an independent public accountant. (Certified Public Accountant) In order to express an opinion on the substantive accuracy of the financial statements, the auditor rather reviews a sample of the statistical record and prepares an audit report. This report is the formal audit opinion or warning that the auditor issues in response to the audit or review performed. However, it should be noted that this report does not include all audited accounting data.
The auditor should remain independent. Therefore, the auditor should not be an employee of the client’s company. It is very important for the external auditor to know the requirements for the auditor’s independence. Otherwise, the opinion will be questionable.
Tax services:
In addition, the accounting firm performs various tax services. Accountants prepare income tax returns (ITR), corporate taxes and remittances. As part of this, the accountant represents clients in tax assessments and audits. It is imperative that tax accountants know the dynamic tax laws, BIR regulations, and local tax laws that regularly affect their clients so that tax accountants can provide clear advice on tax reductions. Knowing the tax requirements is also a guideline for tax advisors when preparing clients’ income tax returns and other information submitted to relevant entities such as tax authorities.
Management Consulting:
Similarly, an accounting firm may provide business consulting services. Business consulting services provide management support. Generally, accountants advise their clients on finance, budgeting, business policy and organizational operations, product costing systems, sales, and other business activities.
Budgeting:
Budgeting is the effective management of cash flow by forecasting or predicting future financial goals. Periodically, an accountant reviews actual cash flow against what it should have been. Management then carefully analyzes the differences to determine the possible causes, whether they are favorable or unfavorable situations, and how to control them. The reasons for performing such an analysis are to improve forecast accuracy and to close the gap between budgeted and actual performance.
Accounting Systems Design:
The accounting firm can provide accounting systems design services. This includes evaluating the company’s controls to see what improvements have been made. An accountant working as a systems analyst is the person who designs the accounting forms and installs the accounting procedures to record the accounting information. This may include setting up a computerized accounting system customized for the client’s business.
General Ledger – Keeping track of your business information.
When you do business, you have information – it’s a simple fact. What you do with that information can have a huge impact on the success of your business. Have you thrown all your invoices and receipts in the drawer? Or, worse, have you not kept that information at all? In either case, you’re in the dark about your company’s finances, which can quickly lead to its demise. This is why the general ledger account was created. The general ledger is a system where all duplicate debit and credit entries are recorded. The purpose of a ledger is to know where you stand financially so that you don’t have to guess at your financial situation and can make better decisions.
When recorded in the formal accounting sense, it refers to an accounting transaction in a journal or ledger. What used to be handled in paper journals is now usually handled by a computerized accounting system. The analysis of business transactions in the form of old-fashioned journal entries is still important. It’s just handled in a different way. (and more efficiently) as technology develops over the years: with computers and software.
Every transaction must be recorded so that the user can see the details of that transaction. Journal acts as a log that records each transaction. The next step is to record the same transaction in the general ledger. It stores the records in chronological order as units. The general ledger is divided into as many accounts as necessary to gather the items recorded from the journal and classify them according to major financial items.
Once the general ledger system is up and running, it provides the business owner with extremely useful information to help make future decisions based on sound financial information.
Converting your accounting to a computerized system
When converting from a manual accounting system to a computer system, the conversion will take a little longer than a reboot to ensure that the new system starts with information that matches the current ledger. The initial data entry process varies depending on the software selected. To ensure proper conversion of the accounting system, use the information provided with the software. Read the system setup guide and choose the method that best suits your work style.
The best time to make the change is at the end of the accounting period. This way, no additional work is required to add transactions that have already occurred in a given period. For example, if you decide to convert your accounting on March 15, all transactions made between March 1 and 15 will have to be transferred to the new system. It is easier to wait until April 1 to start, even if the software was purchased on March 15, while converting to a computerized accounting system at the end of the month, preferably at the end of the calendar or fiscal year. Otherwise, we must enter data for all months of the past year.
If you decide to start accounting on the computer, use the information from the trial balance with which you closed the book at the end of the last tax year. In the computerized system, enter the balance of each account in the trial balance. The asset, liability, and equity accounts should have open balances. However, income and expense accounts should have zero balances.
Of course, if you are starting a new business, there is no prior trial balance. From there, simply enter any balances that may exist in the cash account, any business assets that may have existed at the beginning, and any debts that the business may have already had related to start-up costs. Increase the owner’s commitment that will be made to start the business in the equity account.
After you have entered all the appropriate information, run a series of financial reports, such as the income statement and balance sheet, to make sure the information is entered and formatted as desired. It is much easier to change the formatting when the system is not filled with data.
Make sure you are entering the correct numbers. Make sure that the financial reports in the new accounting system match the ones that were created manually. If the numbers are different, now is the time to find out why. Otherwise, the reports will not be valid at the end of the accounting period. If the numbers don’t match, don’t assume that the only place an error can occur is in the data you entered. Errors can be found in the reports you create. Check the list first, of course. But if the income statement and balance sheet still don’t look right, check the trial balance again.
Accounting through a computer program or accounting software.
Speed – Accounting software can produce reports faster than manual accounting systems. Account reconciliation is quick and easy: when you enter data for a transaction, the software automatically retrieves that information from the corresponding general ledger and journal. Your balance is updated automatically.
Accuracy – Using management software provides more accurate and efficient accounting cycles. As previously errors from manual processes, accounting software eliminates these calculation errors. Erroneous data, such as debit/actual errors, are not allowed and are automatically posted to various ledgers and journals, making error recording information obsolete.
Smooth, meticulous results – Want to know where every penny is going without spending hours digging through financial ledgers? With accounting software, you can view records with the click of a mouse.
Get reports and financial statements faster and easier
Run a variety of reports View the amount in different accounts and update the balance. Preparing your financial statements is as easy as the click of a mouse.
Automate the accounting year processes
After analyzing the source document and recording the transactions, the often tedious manual accounting can be replaced with an automated accounting system.
Here are some steps in the manual accounting lifecycle that are automatically performed by trusted accounting software like QuickBooks:
– Posting to the general ledger account.
– Creation of the unadjusted trial balance.
Posting of fine items.
– Creation of the extended trial balance.
Posting of closed items.
– Posting of closed items.
– Preparing trial balance after closing the account.
– Preparation of financial statements with a solid accountant. (or bookkeeper) and a trusted business software created to provide an accounting system that helps better manage and reflect the state of the business.
