Copyright

Computerized Accounting Software: Advantages & Disadvantages

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Post-Closing Trial Balance: Preparation & Purpose

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:04 Manual vs.…
  • 0:57 Types of Computerized Software
  • 1:44 Advantages of…
  • 2:35 Computerized Software…
  • 3:36 Lesson Summary
Add to Add to Add to

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Login or Sign up

Timeline
Autoplay
Autoplay
Speed

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Kat Kadian-Baumeyer

Kat has a Master of Science in Organizational Leadership and Management and teaches Business courses.

With business as complex as it is today, adopting computerized accounting software seems like the right choice. Even the most sophisticated computer programs have advantages and disadvantages. We will explore these in this lesson.

Manual vs. Computerized Accounting

For some companies, a well-sharpened pencil and ledger book is enough to manage finances. But for most, computerized accounting software is the answer. Years ago, most businesses used manual accounting, the process of keeping records by hand, using paper and pencil. And for some, it may still work. Consider a very small business, with less than five employees, or even a consultant who works alone. For them, having computerized accounting software may not be very cost-effective.

For most businesses, computerized accounting software is a necessity. These are programs set-up on a company's computer that allow a business owner, or finance person, to track sales, expenses, payroll, taxes, and even inventory. The major difference between the two, is the complexity of the accounting that a given business requires to run smoothly.

Types of Computerized Software

Software packages come in all shapes and sizes, but there are primarily two kinds:

  • Off-the-shelf software packages
  • Customized software packages

Off-the-shelf programs are bought as a package and usually offer only the most common functionality, such as sales tracking, payroll, and taxes. Several types of these can be purchased from any major office supply store. Once the product is purchased, it can be uploaded to a computer without much specialized skill. Operating this software is fairly simple as well.

Even though off-the-shelf software offers the basics, depending on the business, sometimes more specialized software is needed. This is when customized software packages come in handy, as they're generally developed for the business owner's unique needs.

Advantages of Computerized Software

An advantage of having computerized accounting software is the money it can save. Think about the real-time decisions that can be made when financial information like profit and loss statements, income statements, and sales reports can be run in an instant.

It's a time saver, too. Payroll, for example, is a time-consuming and tedious task. Every minute and hour must be calculated with accuracy. With computerized software, payroll can be done efficiently in minutes.

Let's face it, nobody is perfect. Computerized accounting software, however, is close to it. Generally, computer programs do not make mistakes. When dealing with billing plus accounts receivable and payable, this is a very comforting fact for companies.

Now, that's not to say that there isn't a downside. Computerized programs have their faults too.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 160 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create An Account
Support